J.P. Morgan's commodities research team stated in a report released on Wednesday that spot gold could rise by approximately 22% from current levels by the end of 2026, potentially reaching $6,300 per ounce. The bank also raised its long-term gold price forecast to $4,500 per ounce.
According to the report, the core drivers supporting gold prices stem from two sources: continued central bank purchases and sustained investor allocation demand through 2026. The bank emphasized that while the current gold rally is not and will not be linear, the underlying trends pushing price levels higher are not yet exhausted. Natasha Kaneva, Global Head of Commodities Strategy at J.P. Morgan, noted that the long-term trends of official reserve diversification and investor allocation into gold still have room to expand.
The report attributes the current gold price surge to a combination of traditional bullish factors, including a weaker U.S. dollar, declining U.S. interest rates, and rising economic and geopolitical uncertainties. J.P. Morgan highlighted that in the current environment, gold serves both as a hedge against currency depreciation and as a non-yielding asset competing with income-generating assets like U.S. Treasuries and money market funds.
Gregory Shearer, Head of Base and Precious Metals Strategy at J.P. Morgan, disclosed in the report that total gold demand from investors (including ETFs, futures, bars, and coins) and central banks reached approximately 980 tonnes in the third quarter of 2025. This figure is more than 50% higher than the average of the previous four quarters. Amid rising prices, this quarterly demand inflow of "around 950 tonnes" translated into approximately $109 billion at an average quarterly price of $3,458 per ounce, representing an increase of about 90% compared to the average of the prior four quarters.
Looking ahead to 2026, J.P. Morgan expects demand from both investors and central banks to remain elevated, with average quarterly demand projected at around 585 tonnes for the year. The demand structure is roughly broken down as follows: central banks at about 190 tonnes per quarter; bar and coin demand at approximately 330 tonnes per quarter; and combined ETF and futures inflows totaling about 275 tonnes for the full year, with potentially more concentrated inflows in the earlier part of the year.
The bank's price prediction methodology relies on an empirical relationship between quarterly net demand from investors and central banks (in tonnes) and gold price movements. This relationship explains approximately 70% of the quarterly variation in gold prices. The analysis suggests that when quarterly net demand from these groups reaches about 350 tonnes or more, gold prices are more likely to increase during that quarter. Furthermore, for every 100 tonnes above this 350-tonne threshold, gold prices are estimated to rise by roughly 2% quarter-on-quarter.
The report underscores that central banks will remain a crucial pillar of support for the gold market. Even though central bank purchases have exceeded 1,000 tonnes annually for three consecutive years, J.P. Morgan believes the trend of structurally high buying will persist into 2026. The bank forecasts central bank gold purchases of around 755 tonnes in 2026. While this is below the peak "over 1,000 tonnes" seen in the past three years, it remains significantly higher than the 400-500 tonne range observed before 2022.
J.P. Morgan also noted that a decline in the tonnage of central bank purchases may reflect more of a "mechanical change" than a structural shift. When gold prices are around $4,000 per ounce or higher, central banks do not need to purchase the same quantity in tonnes to increase the proportion of gold in their reserves to target levels.
On the investor side, J.P. Morgan anticipates that allocation interest will continue. The report indicates that long futures positions remain dominant, but futures represent only one part of investor gold holdings, with other significant channels including ETFs and physical bars and coins. The bank projects net inflows of approximately 250 tonnes into gold ETFs in 2026. Meanwhile, annual demand for bars and coins is expected to remain high, exceeding 1,200 tonnes.
J.P. Morgan also suggested that the base of gold "holders" could broaden further, with Chinese insurance institutions and the cryptocurrency industry potentially emerging as new sources of demand. Mr. Shearer stated that while pinpointing the exact timing of fund inflows is challenging, the team maintains strong confidence in the demand "firepower" for 2026, even considering their investor demand assumptions as potentially conservative.
The report presents a scenario analysis: if just 0.5% of foreign-held U.S. assets were reallocated into gold, the resulting new demand could be sufficient to push gold prices toward $6,000 per ounce.
On the supply side, J.P. Morgan emphasized that gold mine supply response to high prices is "relatively inelastic and slow to adjust." With demand expected to remain robust, risks are skewed towards gold prices reaching multi-year targets more quickly.