JPMorgan's latest analysis indicates that the underlying logic of the precious metals and broader commodities market is undergoing a phase shift against the backdrop of a change in the Federal Reserve's policy stance. Within this shift, the upward momentum for gold is being notably suppressed, while industrial metals are gradually becoming the focal point.
Gregory Shearer, the bank's Head of Base and Precious Metals Strategy, noted in a recent interview that the hawkish signals emanating from the Fed under the leadership of Kevin Warsh, combined with the latest policy communication from the Federal Open Market Committee (FOMC), "have truly turned a pause in the structural gold bullish story into a deeper freeze."
He emphasized that with persistent expectations for interest rate hikes, market willingness to invest in gold has declined noticeably. The latest data shows a further drop in U.S. federal funds rate futures, implying an approximately 80% probability of a Fed rate hike in September.
In contrast to gold, base metals like copper are seen as having stronger appeal. Shearer stated that current support for the copper market stems from a recovery in global industrial activity and persistently tight supply. "We expect a stronger growth impulse from China in the second half of 2026, while mine supply remains very weak," he said.
Policy factors are also key regarding the trajectory of copper prices. Shearer pointed out that the U.S. review of tariffs on refined copper will be a core variable affecting the market. He anticipates that the U.S. will design a tariff structure that maintains import attractiveness, thereby continuing this resource competition and potentially driving copper prices to around $15,000 per tonne.
In the energy market, JPMorgan provided a specific assessment of the supply recovery path. Shearer stated that a resumption of traffic through the Strait of Hormuz is the most likely scenario. His team expects oil shipment volumes to recover to around 68% of pre-conflict levels by around July and gradually approach 100% within 2026. However, he cautioned that this process could be accompanied by setbacks and delays.
Inventory changes are a core basis for their price forecasts. Shearer noted that the decline in OECD commercial inventories has been smaller than expected, indicating a potentially more pronounced contraction on the demand side. "This means the upward price pressure from inventory drawdowns has weakened significantly compared to our assessment one or two months ago," he said.
Based on this analysis, JPMorgan forecasts Brent crude oil prices to average around $86 per barrel in the third quarter of 2026, about $80 in the fourth quarter, and recede to around $78 by year-end. Looking further ahead, the average price in 2027 could drop to $64, below the current forward curve level. However, Shearer also stressed that, given the pace of supply and demand recovery, oil prices in the second half of 2026 could still be higher than levels reflected in the forward market.
Gold's role is also being reassessed internally. On April 9th, Tai Hui, Chief Market Strategist for Asia Pacific at JPMorgan Asset Management, stated during a media briefing that the significant decline in gold prices during the Iran conflict had undermined its reliability as a safe-haven instrument. He remarked bluntly, "Gold did not work as a hedge against geopolitical risk."
Specifically, within 20 days after the attack on Iran, the gold price fell from a high of $5,415 per ounce to a low of $4,100, a drop of 24%, and failed to regain clear upward momentum throughout the ongoing conflict. Tai Hui pointed out that, historically, gold's performance during geopolitical events has been inconsistent, "roughly 50-50, like a coin toss."
He further explained that gold not only has an unstable correlation with risk assets, but its volatility is also close to that of emerging market equities, while it generates no yield. "If you are holding gold for the central bank buying or currency debasement logic to enhance returns, that's valid; but if it's for hedging market pullbacks, it's not a particularly reliable tool," he said.
However, he did not deny gold's allocation value. He noted that ongoing efforts by central banks to diversify reserves and reduce reliance on the U.S. dollar, along with investor demand to hedge against government debt expansion and money supply growth, still provide long-term support. "Given limited growth in gold supply, it still has investment merit, but it must be clear that it is an investment asset, not a hedging asset."
Despite the suppression of its short-term thesis, JPMorgan overall maintains a positive long-term view on gold. On February 17th, the bank's view team stated that market perceptions that gold's rally is unsustainable are not valid.
Kriti Gupta, Executive Director at JPMorgan Private Bank, and Global Investment Strategist Justin Biemann pointed out that gold prices have risen over 170% cumulatively in the past five years, with geopolitical turmoil being the key driver.
They wrote, "Gold has been on a tear over the past five years, soaring more than 170%," adding that, coupled with concerns about currency debasement, inflation, economic growth, and fiscal conditions, this precious metal continues to attract investors during periods of stress.
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