JPMorgan Chase & Co. sees an opportunity in gold ahead of a likely US recession, predicting prices will push past $2,000 an ounce by year-end and hit fresh records in 2024 as interest rates start to fall.

Falling real yields in the US will be a “significant driver” for the precious metal when the Federal Reserve starts to deploy rate cuts, which should play out in the second quarter of next year, Greg Shearer, executive director of global commodities research, said in an online briefing on Wednesday.

Gold has rallied around 15% over the past 12 months, supported by signs the US rate-hiking cycle was nearing an end, buying by central banks, as well as bouts of haven demand. In early May, it approached its record high of $2,075.47 an ounce, set in 2020.

The bank has an average price target of $2,175 an ounce for bullion in the final quarter of 2024, with risks skewed to the upside on a forecast for a mild US recession that’s likely to hit sometime before the Fed starts easing.

“We’re in a very prime place where we think gold ownership and long allocation to gold and silver is something that acts as both a late cycle diversifier and something that will perform as we look to the next sort of 12, 18 months,” Shearer said.

Gold and silver are “quite agnostic” to whether there’s a soft landing or hard landing in the US, although a more pronounced recession would result in a more dramatic cut in interest rates, he said. That’s in contrast to equities and cyclical commodities, such as aluminum and copper, where returns can vary considerably depending on the economic scenario, Shearer said.

Money managers’ net-long positions in gold futures have increased this year, but the trade still isn’t too crowded, he said. Other sources for physical demand have also come into effect, with central bank purchases becoming an increasingly strong driver of prices.

“There’s an eagerness here to really buy in and diversify allocation away from currencies,” Shearer said, adding that geopolitical risks have made gold even more appealing to governments.