JPMorgan Private Bank sees further downside for gold as rates outlook pressures demand
Thin market liquidity and expectations for higher interest rates are keeping pressure on gold after its latest sell-off. JPMorgan Private Bank says the metal is unlikely to find a firm bottom until borrowing costs peak, linking the outlook to further Federal Reserve tightening into early 2027.
Highlights
- JPMorgan Private Bank sees continued downside risk for gold as thin liquidity and investor adjustment to a higher-rate environment persist.
- JPMorgan expects the Federal Reserve to raise rates in December and the first quarter of 2027, sustaining pressure on non-yielding assets like gold.
- The bank forecasts 10-year U.S. Treasury yields to peak at 5.25%–5.5% by midyear, suggesting fixed-income will become more attractive relative to gold.
Rates outlook shapes gold weakness
As reported by Bloomberg, Yuxuan Tang, head of rates and foreign-exchange strategy for Asia at JPMorgan Private Bank, says gold still faces downside risk even after the recent decline. She says liquidity remains thin, leaving the metal vulnerable as investors continue to adjust to a higher-rate environment.Tang says gold will find a solid bottom when rates peak. JPMorgan Private Bank expects the Federal Reserve to raise rates in December and again in the first quarter of 2027, a path that would keep pressure on non-yielding assets such as gold.
Treasury yields remain key market signal
The bank expects yields on 10-year U.S. Treasuries to peak at 5.25% to 5.5% by midyear, up from the current level of just over 5%. That outlook suggests fixed-income returns could become more attractive relative to gold while monetary policy remains restrictive.For bullion markets, the view implies that any durable recovery may depend less on the recent sell-off itself and more on clear evidence that U.S. rates have reached their high point. Until then, rising yields and limited liquidity are likely to remain the main risks for prices.
Our earlier article on rising U.S. Treasury yields and fiscal strain explained how long-term borrowing costs above 5% are filtering through to mortgage rates, federal interest expenses, and tighter financing conditions. It also highlighted that expectations of heavy debt issuance and political gridlock around deficit reduction can keep yields elevated, reinforcing a higher-for-longer backdrop. That environment tends to reshape investor preferences by making yield-bearing assets more competitive and liquidity more constrained.
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