JPMorgan Chase & Co. has lowered its 2026 average gold price forecast to $5,243 per ounce, down from its previous estimate of $5,708, citing softer near-term demand for precious metals as investor interest cools amid elevated inflation and energy market uncertainty. Despite the downgrade, the investment bank still expects prices to rise toward $6,000 per ounce by the end of the year, supported by easing energy and inflation uncertainties. The bank also expressed greater caution about silver, saying the extreme tightness in physical markets that fueled the metal's recent outperformance is likely to fade. Gold prices have declined more than 13% since the start of the conflict, with spot gold trading around $4,530.33 per ounce at the time of writing, having slipped to a more than one-month low. The latest development shows core PCE inflation has stayed above 3% all year, with services inflation remaining stuck above 3%, creating an environment that supports precious metals as inflation hedges.
Gold (XAU/USD) has broken below its 20-day, 50-day, and 100-day exponential moving averages while trading inside a five-month descending channel since January. According to market analysis, the asset bounced off the lower boundary on March 23 before recovering, but the structure has cracked further in recent weeks. The breakdown sits inside a falling channel that has held since January, with only the 200-day EMA at $4,366 still providing support for the broader uptrend. The fact that gold lost three short-term EMAs without a clean reclaim suggests sellers control the immediate trend, with the 200-day reclaim becoming the next decisive factor. As per Reuters, this past week was described as a "natural experiment" for gold, which was torn between rising oil prices on one hand, and rising yields on the other, with oil prices winning and pushing gold down.
The latest Commitments of Traders (COT) report from the CFTC shows a sharp divergence in gold futures positioning. Commercial hedgers, who are physical-market participants like miners, refiners, and jewelers, added 10,818 short contracts in the week ending May 12 when the right shoulder top formed. As reported by market analysts, commercial shorts now make up 71.2% of open interest, marking the dominant force in the market. In contrast, non-commercial speculators, typically managed money funds and large traders, added 7,979 long contracts in the same week, expanding their net long exposure even as commercials hedged aggressively. The debasement trade remains dormant, with the flight to safety into gold temporarily stopped by concerns over unsustainable fiscal policy and mounting public debt burdens.
Markets are increasingly pricing in a U.S. Federal Reserve rate hike before the end of the year, with a 40.7% chance of a 25-basis-point rate hike by December, and another 12.1% chance of a 50 bps rate hike, according to CME Group's FedWatch tool. This shift in monetary policy expectations has contributed to the recent pullback in precious metals, as traders focus on the fact that these moves make it less likely that the Fed will cut interest rates. However, economist Peter Schiff reiterated his bullish stance, noting that traders are missing the plunge in real rates that remains very bullish for precious metals. JPMorgan expects central bank demand for gold to rebound in the second half of 2026, forecasting quarterly central bank and investor demand to average around 620 tons per quarter, compared with 750 tons last year.
Retail sentiment around precious metals shows divergent patterns on Stocktwits. GLD sentiment was in the 'neutral' territory amid 'high' message volumes, while SLV sentiment was in the 'extremely bullish' territory also with 'high' message volumes. GLD has rallied about 40% in the last one year, while SLV has soared more than 133% in the same period. Despite the short-term volatility, JPMorgan maintains its bullish long-term outlook, expecting both gold and silver to climb by the end of the year. The bank forecasts silver to reach an average of $90 per ounce by the fourth quarter of 2026, with the options market on the SPDR Gold Shares ETF (GLD) revealing a put-call ratio by open interest of 0.58, indicating continued hedging activity amid the current market uncertainty.
