The Fed, Trump and the dollar: why JPMorgan and Goldman expect gold prices to rise by 20-40%

Gold prices, which updated the record a day earlier, will continue to rise this year and next year, as hopes for lower interest rates by the U.S. Federal Reserve are growing, and the independence of the regulator has come into question, according to investment giants from Wall Street. Thus, JPMorgan Chase predicts a 20% rise in the price of precious metals by the end of 2026, and Goldman Sachs allows them to soar by 40% by July. However, Morningstar warns that peaks in the value of gold are often followed by long periods of low returns or sharp declines.

The return of the Federal Reserve to lower interest rates, which the market expects in September, should stimulate the inflow of investment in gold-backed funds and push the price of precious metal to $3675 per troy ounce this year, wrote JPMorgan analyst Patrick Jones to clients on September 3. On that day, spot and futures gold prices hit a record high.

According to Jones' forecast, gold will rise to $4,000 by the second quarter of 2026 and reach $4250 by the end of the year - especially if U.S. President Donald Trump succeeds in firing Lisa Cook, a member of the Fed's Board of Governors. The JPMorgan analyst emphasized that any risk of "weakening Fed independence could have serious implications for long-term gold prices," Yahoo Finance reported.

If the Fed's reputation as an independent regulator of the U.S. financial system is undermined and investors move even 1% of funds from U.S. government bonds into gold, prices for the precious metal could soar to $5,000 an ounce by mid-2026, Goldman Sachs warned.

"A scenario in which the Fed's principle of independence is compromised would likely lead to higher inflation, lower stock and long-term bond prices, and a weakening of the dollar's status as a reserve currency," Bloomberg quoted Goldman Sachs analyst Samantha Dart as saying. - In contrast, gold is a savings vehicle that doesn't depend on trust in [government] institutions. Diversify into exchange-traded commodities, especially gold."

- TD Securities closed a tactical long position (in expectation of a rising price) in gold in part because of the precious metal's outperformance relative to real yields and signs that macro funds have started to actively join the rally, exchange-traded commodities strategist Daniel Gali told The Wall Street Journal. He also pointed to "inherent risks associated with news releases" on the Cook and Trump court standoff, Fed leadership statements and U.S. labor market data. TD Securities made $3.1 million on the bet, opening a position at $3345.5 an ounce and closing at $3635, Gali said. The company remains strategically optimistic about gold and, as long as the dollar continues to lose appeal as a savings vehicle, will look to re-enter the market on the upside, he added.

- State Street Investment Management strategist Akash Doshi described a scenario in which gold could reach $3700 by the end of September. That would be about 4% above the Sept. 3 closing level. According to Doshi's estimate, this will happen with a 50% probability if the Fed cuts interest rates at its September meeting and either takes a softer stance or warns of the risk of stagflation - a combination of economic slowdown and inflationary threats, writes Barron's. According to Doshi, the main driver of gold's rise in recent quarters remains the trend toward a weaker dollar.

- Ed Yardeni, president of Yardeni Research, said on September 2 that he maintains a positive view on the outlook for gold, largely because of geopolitical risks. Yardeni has been optimistic about gold since last year - since he said the metal "decisively" crossed the $2,000-per-ounce threshold.

- the gold rally could continue thanks to aggressive demand for the precious metal from central banks, macroeconomic uncertainty, lower U.S. interest rates and a weaker dollar, Morningstar portfolio strategist Amy Arnott wrote. However, there are significant risks for investors because gold is already trading at record highs, and historical data shows that such peaks are often followed by long periods of low returns or sharp declines, Arnott warned. While gold remains a strong portfolio diversification tool due to its low correlation to other assets, the Morningstar strategist recommends caution, limiting gold to five percent of a portfolio and remembering that rallies can't last forever.

The rapid growth of gold and silver prices has brought tangible benefits to the shares of their producers. Quotes of Pan American Silver since the beginning of the year rose by almost 70%, shares of Barrick Mining jumped by more than 75%. And Newmont Mining has more than doubled in value, making it the second highest yielding company in the S&P 500 index in 2025 - behind only artificial intelligence investor favorite Palantir. This is a clear indication of an unusual market situation, with gold mining stocks, traditionally considered "defensive," rising almost as fast as the beneficiaries of the AI boom, Barron's says.

This article was AI-translated and verified by a human editor