JPMorgan cuts gold price target as Fed rate bets fade

JPMorgan analysts lowered their gold price forecast, pointing to a shift in Federal Reserve rate expectations that has drained near-term momentum from the rally.

The bank's commodity research team cut its average fourth-quarter estimate to $2,250 an ounce from $2,350, two people familiar with the call said. The new target still sits above spot levels but narrows the upside many traders had priced in.

Gold had climbed more than 4% in June on bets the Fed would cut rates as soon as September. That trade lost steam after sticky inflation prints and cautious comments from Fed officials. Futures markets now price a less than 50% chance of a cut before November, down from nearly 70% a month ago.

The lower JPMorgan target reinforces a cautious tone already visible in the options market. Call skew on gold futures has flattened over the past two weeks. Open interest in upside strikes has declined, data from Bloomberg show. Traders said the shift reflects a view that the metal needs a fresh catalyst to resume its climb.

Central-bank buying and geopolitical risk remain structural supports. Those factors take time to play out, and near-term price action will likely hinge on the next inflation reading and the Fed's July meeting, the JPMorgan note said.

For gold miners, the revised forecast adds a headwind. Producers that had relied on a rising price to boost margins now face a flatter outlook. Kinross Gold, which operates in the Americas and West Africa, trades at a discount to net asset value even with rising output, as noted in a recent gold profile. A lower gold price path could compress those margins further if costs keep rising.

Spot gold traded near $2,290 an ounce Tuesday, little changed on the session. The metal had touched $2,365 in early June before retreating.

The Fed's next rate decision is set for July 31.