If you’re underweight gold, the message from some of Wall Street’s biggest banks is to “buy on the edge.” Gold futures fell more than 11% on Friday, settling well below the key $5,000 an ounce level after President Donald Trump named Kevin Warsh to replace Jerome Powell as the next Federal Reserve Chairman. Warsh’s choice appeared to allay concerns about central bank independence, but largely removed the impact of the recent precious metals boom that has pushed gold to all-time highs. Investors appear to be easing back into gold after last week’s decline. Futures prices related to precious metals briefly rose on Monday. The previous drop was about 0.5%, but still well off from last night’s low. JPMorgan and Deutsche Bank see the recent decline as a buying opportunity, and expect further gains in the future. “Despite the recent short-term volatility, we believe the long-term upside momentum remains intact and remain bullish on gold over the medium term on the back of clean, structural and continued diversification trends within a still firmly entrenched regime of physical versus paper outperformance,” said JPMorgan Strategist Gregory Shearer. Mr. Shearer also raised his year-end target for gold to $6,300 an ounce. This is 33% higher than when gold traded early Monday morning. “Gold remains a dynamic and multifaceted portfolio hedge, and investor demand continues to exceed previous expectations,” said Shearer. Deutsche Bank’s Michael Xue also thinks gold will resume its upward trajectory. He reiterated his 2026 target of $6,000 an ounce, suggesting upside room of about 26%. “Thematic factors in gold remain positive and we believe investors’ rationale for gold (and precious) allocations remains unchanged. We do not believe the situation is poised for a sustained reversal in gold prices, and there are some contrasts between today’s situation and the background of gold weakness in the 1980s and 2013,” the strategist said in a letter to clients.
