The price of gold has been on a tear in recent years and could reach astronomical heights by the end of the decade if foreign investors shift away slightly from the U.S., according to analysts at JPMorgan.
In a note on Wednesday, they laid out a scenario where gold would hit $6,000 per ounce by 2029, an 80% jump from the current price of about $3,300.
If just 0.5% of foreign-held U.S. assets are reallocated to gold, that would result in 18% annual returns and eventually send prices to $6,000, JPMorgan estimated.
That’s because the supply of gold isn’t expanding by much, meaning that a relatively minuscule boost in demand can create a big price swing.
“While hypothetical, this scenario illustrates why we remain structurally bullish gold and think prices have further to run,” analysts wrote.
Gold has jumped more than 20% so far this year, and prices have doubled from where they were three years ago.
After Russia invaded Ukraine in 2022, triggering financial sanctions on Moscow that saw its dollar and euro assets frozen, central banks around the world began buying up gold out of concern that their own holdings could be at risk someday.
High inflation and exploding budget deficits added more fuel to gold’s rally, and the election of President Donald Trump further accelerated the trend. Since he returned to the White House, he has launched a trade war that sank U.S. assets and also attacked Federal Reserve Chairman Jerome Powell.
“The recent period in financial markets has demonstrated that interest and trust in US assets are already being questioned, and the US is vulnerable to capital outflows,” analysts warned.
A 0.5% reallocation of total foreign holdings of U.S. assets into gold translates to $273.6 billion overall pouring into the precious metal over four years, or about 2,500 metric tons, JPMorgan calculated.
While that doesn’t seem like much, amounting to only 3% of total gold holdings, “the additional demand impulse on a quarterly basis is quite immense,” the note added.
The bullish scenario adds to already-lofty views for gold. Last month, JPMorgan predicted gold would reach $3,675 by the fourth quarter of this year, then top $4,000 by the second quarter of 2026, representing a 20% bump from today’s price.
