(Yahoo!Finance) - Gold (GC=F) prices, already at record levels, are likely headed higher as rate cut expectations grow and Fed independence comes into question, according to JPMorgan analysts.
On Wednesday, gold futures touched a record high north of $3,620 per troy ounce while immediate delivery bullion rose to as much as $3,546, also a new high.
JPMorgan analysts forecast gold prices will rise further this year as investors expect the Federal Reserve to cut rates starting in September. Gold becomes more attractive to investors as falling rates reduce its competition with yield-bearing assets.
"US Federal Reserve rate cuts in-line or exceeding expectations should catalyse further gold ETF inflows and thus drive gold prices to their year-end forecast of ~$3,675/oz," JPMorgan analyst Patrick Jones wrote in a note on Wednesday.
From there, gold should reach $4,000 by the second quarter of next year and surge to $4,250 by the end of 2026, especially if the Trump administration's attempt to remove Fed governor Lisa Cook is successful. Cook's departure could have wider implications for reshaping the central bank, the analysts said.
"We believe any potential weakening of the US Federal Reserve's independence could have significant implications for long-term gold prices," Jones wrote.
Silver (SI=F) prices also broke to new 14-year highs, surging past $41 per ounce on Wednesday.
JPMorgan analysts said rising precious metal prices should boost earnings for international mining companies such as South African miner AngloGold (AU) and Mexico-based silver miner Fresnillo (FRES.L), whose shares have gained 160% and 231% year to date, respectively.
Mining stocks such as Canada-based Alamos Gold (AGI) and Colorado-based Newmont (NEM) have each surged 78% and more than 100%, respectively, year to date.
Gold futures are up 39% this year, driven by central bank buying and increased inflows into physically backed exchange-traded funds.
The precious metal has far outperformed the S&P 500 (^GSPC) and even bitcoin (BTC-USD), which are up 9% and 20%, respectively, during the same period.
On Tuesday, UBS reiterated its forecast of $3,700 per ounce by June 2026, noting that an increase to $4,000 "in a risk scenario where geopolitical or economic conditions deteriorate cannot be ruled out."
Earlier this month, Goldman Sachs analysts reaffirmed their forecast of $4,000 per troy ounce for mid-2026, "driven by structurally strong central bank demand and ETF-inflows" supported by Fed easing.
By Ines Ferré · Senior Business Reporter
