Gold Price Could Surge to $5,000 as Central Bank demand Persists,JP Morgan Analyst Predicts
NEW YORK – Gold’s remarkable rally isn’t over yet,and could accelerate to a price exceeding $5,000 per ounce as soon as next year,according to Alex Wolf,global head of macro and bond strategy at JP Morgan. The prediction comes amid sustained demand from central banks globally seeking to diversify their holdings and preserve value.
This potential surge builds on a year of significant gains for the precious metal, which has already risen more than 50% and reached a record high above $4,380 in October before a recent correction. While the pace of purchases may moderate due to increasing prices, Wolf anticipates continued accumulation of gold reserves, particularly from central banks in emerging markets.
Central bank purchases have been a key driver of gold’s price increase in recent years. Between September 2022 and September 2023, these institutions added 634 tonnes of gold to their reserves, according to the World Gold Council (WGC). Though slightly below the levels of the previous three years,this remains significantly above the pre-2022 average,with the WGC forecasting annual purchases of 750-900 tonnes by 2025.
china is leading this trend, aiming to build a financial system less reliant on the U.S. dollar. Poland, Turkey, and Kazakhstan have also been actively increasing their gold reserves.
“Gold still represents a relatively small percentage as part of foreign exchange reserves,” Wolf explained, noting that emerging market economies with budget surpluses are reinvesting cash flows. “Most of this still goes to dollars. It’s not that gold replaces the dollar,it’s just that an ever-increasing share is spent in gold.”
