JPMorgan's latest precious metals report clearly states that the previous bullish phase, driven by safe-haven sentiment and aggressive central bank purchases, has officially ended. As demand drivers including central bank buying, Asian physical demand, and retail investor purchases have comprehensively cooled, the fund flows of interest rate-sensitive gold ETFs have once again taken the lead in dictating gold price movements. The negative correlation between gold and US real interest rates has powerfully re-emerged after lying dormant for several years. This signifies that the rise and fall of gold prices are once again tightly linked to the Federal Reserve's next moves.

Although the gold price has staged a technical rebound from around the $4000 level, the bank still warns that near-term risks are skewed to the downside. Should summer economic data outperform expectations, forcing the Federal Reserve to raise interest rates ahead of schedule, the gold price risks falling below the $4000 mark, triggering technical selling pressure and potentially probing the $3500 to $3600 range. The bank has lowered its average gold price forecast for the third quarter to $4300 per ounce and for the fourth quarter to $4500 per ounce, representing a significant reduction of 20% to 25% from prior expectations.

Despite adopting a more conservative short-term outlook, the bank has not abandoned its long-term bullish stance. It anticipates that the aforementioned structural forces will regain momentum in 2027, driving the gold price higher quarter by quarter. Its forecasts are $4600 per ounce for Q1, $4700 for Q2, $4800 for Q3, and $5000 for Q4, with the full-year average potentially reaching $4775. However, this is contingent on the Federal Reserve achieving a more substantial dovish policy shift.