PHYS - J.P. Morgan sees gold pushing past $2000 in 2024 as Fed cuts rates

2023-07-26 17:50:17 ET

Gold prices extended gains Wednesday after the Federal Reserve delivered a widely expected quarter percentage point interest rate hike to a 5.25%-5.5% range while also leaving the door open for potential additional increases.

Roughly two hours after the Fed announcement, the ICE U.S. Dollar index was down 0.4% to 100.99, providing support for dollar-denominated prices of gold, and the yield on the 10-year Treasury was 3.8579%, down from 3.911% on Tuesday.

The Fed statement "gave no hint of when the Fed might pause its rate hikes once more, as it did at the June meeting," and without additional guidance on the likely course of future Fed activity, the price of gold " firmed more than $10/oz in the immediate aftermath of the announcement," said George Milling-Stanley, chief gold strategist at State Street Global Advisors.

August Comex gold ( XAUUSD:CUR ) climbed to as high as $1,979.90/oz in electronic trading following the Fed announcement, after the front-month contract already ended +0.3% at $1,968.90, its best settlement in a week, ahead of the Fed's decision.

ETFs: ( NYSEARCA: GLD ), ( GDX ), ( GDXJ ), ( IAU ), ( NUGT ), ( PHYS ), ( GLDM ), ( AAAU ), ( SGOL ), ( BAR ), ( OUNZ )

J.P. Morgan sees an opportunity in gold ahead of a likely US recession, predicting prices will push past $2,000/oz by the end of this year and rising to fresh records in 2024 as interest rates start to fall.

Falling real yields in the U.S. will be a "significant driver" for gold when the Fed starts to deploy rate cuts, which should play out in next year's Q2, JPM analyst Greg Shearer said.

More analysis on gold:

• Gold Still Looks Pricey On A 'Fair Value' Model
• $4,000 Gold Is Still Possible After The Fed Starts Easing
• BRICS Gold Standard Is A Big Opportunity

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