Markets
February 27, 2026
The gold price surge over the past month grabbed headlines, but J.P. Morgan is sounding a note of caution, warning of possible demand declines. One of the bank’s recent notes, while calling gold a long-term diversifier, points out significant volatility risks for investors to watch.
According to J.P. Morgan, these risks include the possibility of central banks slowing down purchases and a decrease in retail activity.
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Why the Gold Price Surge Has J.P. Morgan Urging Caution on 2026 Forecasts
In its report titled “The case against gold and why it’s wrong,” J.P. Morgan first examines how gold performed compared to other assets during previous periods of geopolitical risk.
According to the J.P. Morgan gold outlook, gold fared much better than other asset classes, averaging a return of 1.8% and a median of 3.0%, while oil had an average of 1.3% and a median of 0.9%, and stocks had an average of -1.6% and a median of -1.9%.
The report goes on to discuss the gold volatility risks, especially reduced central bank gold buying and waning interest from retail investors.
It highlights the possibility of banks slowing down purchases or wanting to sell their gold reserves. The report brings up an example from 1999-2002, when the United Kingdom, in a bid to diversify its holdings into foreign currency, held auctions to sell 50% of its gold reserves. Around the same time, a bill was passed to delink the Swiss franc from gold, according to the report.
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The events led to gold falling 10% in three months, and the collapse stopped only after global central banks signed The Washington Agreement on Gold. The report explores whether it could happen again and the consequences of it. It then goes on to suggest that such a scenario is unlikely because gold makes a large part of market reserves, and there are no signs of central banks selling gold.
Further, the report discusses the risk of a fall in retail investor activity, but then suggests that retail activity, although below historic highs, is still in line with historical norms.
At the end, the report summarises that gold has shown promise both as a short-term and long-term investment. It suggests that gold can be a strategic addition to the portfolio despite the short-term swings. Additionally, it claims that gold can reduce the overall portfolio volatility.
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The note is in line with J.P. Morgan’s recent gold price forecast for 2026 of $6300, with many analysts even suggesting the $8000 levels. This reflects growing confidence in the precious metal.
If you are an investor, don’t be moved by high price forecasts. Do proper research, compare the forecasts of different banks, and then make a decision.
