JP Morgan, one of the world's leading financial institutions, has released a forecast for gold prices, projecting an average of $5,055 per ounce by the fourth quarter of 2026. This outlook comes amid expectations of strong investor demand and increased central bank buying in the precious metals market.

Key Forecast Details

Factors Underlying the Forecast

The bank's projection is based on several key assumptions:

1. Demand Expectations: JP Morgan anticipates that investor demand and central bank purchases may average around 566 tonnes per quarter next year, potentially indicating a strong appetite for the precious metal.

2. Federal Reserve Policy Considerations: The forecast takes into account a possible transition of the Federal Reserve into a rate-cutting cycle, which typically benefits gold prices.

3. Investment Position: JP Morgan reportedly maintains gold as its highest conviction long position, suggesting confidence in the metal's potential for appreciation.

Market Context

This forecast, if realized, would represent a significant increase from current gold prices. It highlights the potential role of gold as a long-term investment and a hedge against economic uncertainties. Investors and market participants may want to closely monitor global economic indicators, central bank policies, and geopolitical events that could influence gold prices in the coming years.

It's important to note that market forecasts are subject to various factors and can change based on evolving economic conditions. Investors should always conduct their own research and consider their risk tolerance before making investment decisions.

JP Morgan's chief global strategist David Kelly has issued a stark warning about the future of the US labor force, predicting it could experience no growth over the next five years. This forecast comes in light of recent changes in immigration policies and ongoing demographic shifts in the United States.

Recent Labor Market Data

The US Labor Department's latest report reveals a significant slowdown in job growth:

• Payrolls grew by only 73,000 last month, falling short of the estimated 100,000
• Job figures for May and June were revised sharply downward:
  • May's gains reduced from 144,000 to 19,000
  • June's gains reduced from 147,000 to 14,000
• A total of 258,000 jobs were removed from previous estimates
• The US has averaged only 35,000 new jobs per month over the last three months

Factors Contributing to the Tight Labor Market

Kelly attributes the tightening labor market to several key factors:

1. An aging population entering retirement
2. Declining participation among those aged 18-54
3. Demographic trends showing a shrinking working-age population
4. Tightening immigration policies

Demographic Projections and Economic Impact

Census projections paint a concerning picture for the US workforce:

• The population aged 18-64 is expected to decline by over 300,000 in the year ending July 2026
• This trend is projected to continue through 2030

Kelly highlighted the historical context, noting that US economic growth has averaged 2.10% annually since 2000, with 0.80% yearly workforce increases contributing significantly to this growth.

Implications for Economic Growth and Monetary Policy

The combination of demographic trends and tightening immigration policies is expected to:

1. Strain the labor market
2. Impact overall economic growth
3. Require caution from the Federal Reserve before lowering interest rates

Kelly's warning underscores the complex interplay between population dynamics, immigration policy, and economic growth. As the US faces these demographic challenges, policymakers and businesses may need to adapt to a new reality of potentially stagnant labor force growth in the coming years.