Although gold has started the month and the quarter on a positive note, it is important to note that the metal has just gone through one of its most challenging quarters in recent years, falling nearly 30% from the cyclical high reached in January. Gold posted consecutive monthly declines throughout the second quarter as market sentiment shifted fundamentally, with investors reassessing the Federal Reserve's interest rate path and the outlook for the U.S. economy.

One of the biggest headwinds currently facing gold is the Federal Reserve's latest policy stance. Under Chairman Waller's leadership, the Fed has decided to abandon forward guidance. Setting aside the latest weak employment data, markets are becoming increasingly convinced that the United States will continue raising interest rates and that higher rates will remain in place for an extended period. As a non-yielding asset, gold becomes less attractive in a prolonged high-interest-rate environment. If inflation proves far more persistent than markets expect, forcing the Fed to raise rates again later this year, downward pressure on gold prices could intensify further.

At the same time, a stronger U.S. dollar and higher U.S. Treasury yields continue to weigh on gold's ability to sustain its recovery. While the weaker U.S. dollar on Thursday temporarily provided some relief for gold prices, the current advance may represent only a short-term rebound rather than a full trend reversal.

Ongoing gold purchases by central banks remain a key pillar of support for the market, as many countries continue to diversify their foreign exchange reserves away from the U.S. dollar. However, geopolitical support for gold is fading. Following the agreement between the United States and Iran to reopen navigation through the Strait of Hormuz, market attention has shifted back toward economic data and monetary policy.

JPMorgan stated that gold prices may remain constrained in the near term due to weakening demand and are likely to continue trading within a range. The bank cited softer buying activity in key demand sectors and renewed sensitivity of gold to changes in real interest rates as factors that could limit further upside. Nevertheless, JPMorgan remains bullish over the medium to long term. It forecasts that gold will gradually recover during the second half of 2026, with average prices reaching approximately US$4,300 per ounce in the third quarter and rising to around US$4,500 per ounce in the fourth quarter.

Market Analysis:

On the 4-hour chart, gold continues to trend higher, with both the MACD lines and histogram expanding above the zero line, indicating strengthening bullish momentum. Looking ahead to 2027, JPMorgan believes gold is likely to extend its gains, driven primarily by continued central bank purchases, stronger physical demand, and persistent long-term structural allocation demand. These factors are expected to reinforce gold's long-term appeal as both a safe-haven asset and a reserve asset.