Gold will remain most optimal hedge in 2025 and 2026 amid stagflation, recession, debasement and US policy risks: J P Morgan

NEW DELHI: Global investment banking giant JP Morgan has reaffirmed its bullish stance on gold, projecting it as the most optimal hedge through 2025 and 2026 amid mounting risks of stagflation, recession, currency debasement, and US policy uncertainties.

“For investors, we think gold remains one of the most optimal hedges for the unique combination of stagflation, recession, debasement and US policy risks facing markets in 2025 and 2026.”, said the report

The report highlighted the strong momentum in gold prices seen in the first quarter of 2025 as a clear indicator of investor sentiment.

It estimates net gold demand from investors and central banks to average around 710 tonnes per quarter this year, well above the 350-tonne threshold needed to maintain price stability.

According to the analysis, a 100-tonne increase in quarterly demand could push prices up by 2 percent. It also forecasts that central banks will purchase approximately 900 tonnes of gold in 2025, with investor appetite–particularly from exchange-traded funds (ETFs) and Chinese buyers–expected to grow.

It said, “The macro environment remains ripe for both sustained elevated levels of purchases by central banks (900 tonnes forecasted in 2025) as well as a further expansion in investor holdings, particularly from ETFs and China.”

JP Morgan cited rising US tariffs and escalating trade tensions with China as key contributors to a higher likelihood of economic slowdown.
The bank noted signs of stagflation–where slow growth and high inflation coexist–further reinforcing the long-term bullish trend for gold. A structural bull case, it said, implies a sustained rise in prices over time.

The report has sharply raised the gold price forecast, expecting it to average USD 3,675 per ounce by the fourth quarter of 2025 from around USD 3400 now. It also sees gold potentially crossing USD 4,000 per ounce by the second quarter of 2026, supported by persistent global economic tensions and heightened recession risks.

It said, “Tariff-driven recession and stagflation risks are forecasted to continue to supercharge gold’s structural bull run. We now see gold prices reaching an average of USD 3,675/oz by 4Q25 on the way towards above USD 4,000/oz by 2Q26.”

JP Morgan concluded that if demand outpaces current projections, gold prices could exceed expectations sooner than anticipated, cementing its role as a reliable hedge amid growing global uncertainties. (ANI)