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Peter Davis

An writer at FOMOdrive

  • Oct 18, 2023
  • 2 min read

JPMorgan recommends buying gold and selling stocks

The Middle East's new threats caused gold prices to skyrocket.

The price of quotes on Tuesday rose to its highest level in over two and a half months, surpassing $1,960.

Gold has increased in price by 6.5% (or $120) since the start of the Hamas-Israel conflict.

JPMorgan suggests that the proportion of stocks in the portfolio should be decreased and gold should be purchased.

RBC states that the primary factor driving up gold prices is the heightened demand for safe-haven investments due to the escalating geopolitical conflicts in the Middle East.

OANDA notes that gold demand is increasing due to a variety of factors, such as geopolitical risk premium caused by worries of a prolonged military conflict in the Middle East, the possibility of stagflation in the economy due to high oil prices, and the momentum created after key technical levels were surpassed.

After data showing Chinese economic growth above expectations was released, quotes for gold received support as the country is a major purchaser of the precious metal.

The ANZ Banking Group has observed a high demand for gold in the physical market, coming from both central banks and gold consumers in India and China.

At the end of December, Commerzbank predicts gold prices to reach $1,900 per ounce. They also anticipate that by the end of 2024, the price of gold will have risen to $2,100. Nevertheless, unless there is a further increase in tension, the potential for gold prices to rise further is likely to be restricted.

Kitco Metals believes that a serious geopolitical situation is developing in the Middle East, and that gold prices will remain high in the coming weeks, with the possibility of reaching $2,000 per ounce.

JPMorgan is recommending that investors select gold as a way to protect against the rising geopolitical tensions and the predicted decline in bond yields. The bank believes that stock market growth will not be able to be sustained if interest rates stay high for a prolonged time.

This month, despite higher yields in the US bond market and the outbreak of military conflict between Israel and Hamas, the stock market recovered from its recent local lows and rose.

JPMorgan has set a year-end target of 4,200 for the S&P 500, which is a decrease of almost 3% from its close on Wednesday.

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