Gold is awaiting a catalyst, while silver's favorable period may have concluded.
According to a report from a trading desk, on May 17, JPMorgan released its latest precious metals research, authored by Gregory C. Shearer from the commodities research team. Shearer presented divergent outlooks for gold and silver: gold is experiencing a "pause, not a pivot," while silver faces a fundamental deterioration.
Gold: Stuck Between Key Averages, Investor Interest Wanes Shearer noted that his team has published little on gold recently, simply because "there has been little to say." The metal is technically trapped in a range, bounded by the 50-day moving average near $4,730 per ounce above and the 200-day moving average near $4,340 per ounce below.
Market sentiment has concurrently soured. COMEX gold futures open interest and volume remain subdued, fund net-long positions are stagnant at low levels, and ETF inflows have nearly halted. Shearer explained that investors are not dismissive of gold's long-term thesis but are focused elsewhere—on uncertainties surrounding the Strait of Hormuz, energy prices, inflation trends, and the Federal Reserve's response—leaving them with little conviction on gold's near-term direction.
Despite a significant pullback in March driven by investor deleveraging, Shearer maintains that gold's structural bull market logic remains intact. He cites enduring long-term themes supporting gold: erosion of monetary purchasing power ("fiat debasement" trade), U.S. fiscal deficit risks, a shifting geopolitical landscape towards bipolarity, and concerns over unpredictable U.S. policy. These themes are merely "on hold," awaiting clearer resolution regarding the Iran conflict.
Hormuz Reopening is Key: Gold Could Target $4,900-$5,100 The bank's oil analysts believe accelerating inventory draws will eventually force a reopening of the Strait of Hormuz, with a baseline scenario for June. This view directly informs the gold outlook: once the strait reopens, tail risks for energy prices and inflation would recede, and the recent strength in the U.S. dollar and real Treasury yields would begin to fade.
Markets are currently pricing over a 60% probability of a Fed rate hike this year, whereas the bank's economics team forecasts the Fed on hold throughout 2026. A convergence of market expectations towards this view would trigger a dollar reversal, propelling gold higher to potentially challenge the key technical resistance zone of $4,900-$5,100 per ounce. Analysts believe previously reduced positions would then be rebuilt, accelerating gold's advance in the second half of the year.
Year-End Target $6,000: Forecast Revised Lower, Direction Unchanged Due to a clear slowdown in demand momentum in the first half, the bank has lowered its full-year 2026 gold price forecasts.
Revised quarterly forecasts are as follows: - Q2 2026 average: $4,800/oz - Q3 2026 average: $5,300/oz - Q4 2026 average: $6,000/oz Full-year 2026 average: $5,243/oz
The bank forecasts average quarterly gold demand from central banks and investors at about 620 tonnes in 2026 (versus 750 tonnes in 2025), with a clear split in pace: approximately 480 tonnes per quarter in H1, accelerating to an average of 755 tonnes per quarter in H2.
Central Bank Purchases: Analysts lowered their 2026 net central bank gold buying forecast to 640 tonnes from 800 tonnes previously. Q1 data showed Turkey sold 60 tonnes in March alone, leading to reported net global central bank purchases of just 16 tonnes, far below Q4 2025's 132 tonnes. However, total estimated purchases (including unreported) from the World Gold Council and Metals Focus still reached 244 tonnes, up from 208 tonnes the prior quarter, indicating a significant rise in unreported buying. Notably, China's net gold imports surged to 317 tonnes in Q1, nearly triple the prior quarter, with reported PBOC purchases accelerating to 5 tonnes in March and 8 tonnes in April from a prior monthly pace around 1 tonne.
ETF Flows: The 2026 ETF inflow forecast was cut to about 400 tonnes (approx. +10%) from 580 tonnes. Despite several weeks of net outflows in March, global gold ETF holdings are still up 108 tonnes (+3%) year-to-date, showing resilience against a ~40 basis point rise in the 10-year U.S. real yield.
Bar & Coin Demand: Forecast at about 1,540 tonnes, up roughly 10% year-on-year (previous forecast ~1,390 tonnes). Global bar and coin demand reached 474 tonnes in Q1, up 42% year-on-year, the second-highest quarterly record, driven mainly by China (partly due to VAT rule adjustments). However, India's recent 9-percentage-point increase in gold import duty to 15% is expected to persistently dampen Indian demand.
Primary Risk: The Fed Actually Hikes The bank explicitly identified the key downside risk: if U.S. employment remains strong and inflation persists, prompting the Fed to initiate a rate-hiking cycle, investor demand for gold would face a material hit. This could trigger sustained net outflows from Western ETFs, coupled with weaker central bank buying, placing persistent downward pressure on prices. Analysts view this scenario as having a low probability in 2026, but not impossible.
Silver: Five-Year Deficit Era Ends, 'Outperformance' Thesis Unravels The bank's narrative on silver is straightforward. Silver's significant outperformance over the past year was underpinned by extreme physical market tightness—years of cumulative deficits, exacerbated by substantial silver flows into U.S. COMEX warehouses in 2025, straining London spot market liquidity and compressing the gold/silver ratio.
This dynamic has now largely dissipated. COMEX silver inventories have returned to 2024 levels, silver ETF holdings have retreated from highs, and London spot market liquidity is ample. Even a surge in China's March silver imports to 836 tonnes (about triple the prior 12-month average) failed to create significant tightness.
Solar Demand: A Key Variable Reverses Analysts suggest China's March import surge was likely concentrated stockpiling by photovoltaic (PV) firms ahead of the April 1 expiration of an export tax rebate policy. Post-policy, China's PV sector has entered a destocking phase, with Metals Focus reporting a clear weakening in Chinese industrial silver demand starting in April.
Crucially, this breathing room has allowed Chinese PV manufacturers to accelerate adoption of "silver-thrifting" technologies, including wider use of heterojunction (HJT) solar modules utilizing silver-coated copper powder and a shift from multi-busbar (MBB) to zero-busbar (0BB) modules. The bank expects solar silver demand could fall by approximately 30% this year, a reduction of about 60 million ounces.
The result: After five consecutive years of deficit, the silver market is expected to move towards balance this year, with a potential small surplus next year.
Gold/Silver Ratio to Recover to 75:1 With the physical market easing, maintaining silver's significant outperformance relative to gold would rely entirely on investor demand "holding the fort," a considerably more difficult task, the bank argues. Analysts expect the gold/silver ratio to gradually recover, averaging around 75:1 by the end of next year.
However, silver is not being entirely abandoned. Within the bank's forecast for gold to resume its rally in H2 2026, the silver price forecast still reaches an average of $90 per ounce in Q4.
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