JPMorgan warns that gold could fall further before recovering in 2027. For physical bullion holders, however, the more important question is not simply where gold trades next month, but what is happening to the global monetary system and why central banks continue to accumulate gold.
Gold has always moved through periods of volatility. Prices rise, markets correct, investors take profits and sentiment changes. Yet the long term story behind gold is much bigger than any single price forecast.
As the global economy grapples with mounting government debt, persistent inflation risks, geopolitical tensions and questions about the long term stability of fiat currencies, gold is once again taking centre stage in discussions about the future of money.
Recent commentary from JPMorgan Private Bank highlights the possibility of further short term weakness, followed by a recovery once US interest rates peak. While this outlook deserves attention, it also reinforces an important distinction: the short term gold price and the long term role of gold in the monetary system are two different things.
For those accumulating physical bullion, understanding that distinction is essential.
JPMorgan warns that gold could fall further before recovering
According to a report published on 29 October 2026, JPMorgan Private Bank believes gold remains vulnerable to further selling pressure as financial markets adjust to the prospect of higher US interest rates and tighter liquidity.
Yuxuan Tang, the bank’s head of rates and foreign exchange strategy for Asia, has warned that gold could face additional downside before establishing a sustainable price floor.
The concern centres on the possibility that the US Federal Reserve may raise interest rates again, potentially pushing yields on 10 year US Treasury bonds towards 5.25% to 5.5% by the middle of 2027.
Higher interest rates can place pressure on gold because bullion does not pay interest. When government bonds offer higher yields, some investors may prefer income producing assets, particularly when cash is scarce and financial markets are under pressure.
Gold has also experienced selling during periods of market volatility, as investors liquidate assets to cover losses or meet other financial obligations. This can create temporary downward pressure even when the longer term reasons for holding gold remain unchanged.
JPMorgan’s outlook, however, is not entirely bearish. The bank expects gold could recover strongly once the Federal Reserve completes its tightening cycle, with reported price projections of US$4,500 per ounce by the middle of 2027 and US$5,000 by year end.
These figures are forecasts, not guaranteed outcomes. Interest rate expectations, currency movements, investor positioning and central bank demand can all change.
The broader message is that even major financial institutions recognise gold’s potential to recover after periods of monetary tightening.
Why a falling gold price does not necessarily mean the gold story is over
Financial markets often focus on the next interest rate decision, the next inflation report or the next movement in bond yields. These factors matter, but they do not tell the whole story.
Gold is unusual because it is both a traded commodity and a monetary asset. Unlike a government bond, it is not a promise by a government to repay money. Unlike a bank deposit, it is not a liability of a financial institution. And unlike a fiat currency, its supply cannot be expanded through a central bank creating additional currency units.
This does not mean gold is immune to price declines. Its market price can fall substantially, sometimes unexpectedly. Physical bullion also carries premiums, transaction costs and, depending on the arrangement, storage and delivery considerations.
What distinguishes gold is its role as an asset outside the conventional credit system.
When confidence in currencies, government finances or financial institutions comes under pressure, that characteristic can become increasingly important.
A temporary decline in the quoted gold price does not remove the underlying pressures that have encouraged investors and central banks to hold it in the first place.
For more background, read FirstGold’s educational content on physical bullion, paper gold and gold shares.
The monetary reset: why the existing system faces growing pressure
The phrase monetary reset is increasingly used to describe the possibility of a fundamental change in how the global monetary system operates.
It is important to understand what this means. A monetary reset does not necessarily involve a single announcement, a sudden collapse of the US dollar or the introduction of a new currency overnight.
It could instead unfold gradually through changes in international reserves, settlement systems, currency relationships, government financing and the role of gold in national balance sheets.
The post war monetary framework established at Bretton Woods in 1944 placed the US dollar at the centre of the international system. Although the dollar’s convertibility into gold ended in 1971, the dollar retained its dominant position in global trade, finance and foreign exchange reserves.
That system has demonstrated considerable resilience. The US dollar remains the world’s leading reserve currency, supported by the size and liquidity of US financial markets and its established role in international commerce.
However, the system is also facing structural pressures that cannot be ignored.
1. Government debt continues to expand
Governments across the developed world have accumulated substantial debt. Servicing that debt becomes more challenging when interest rates rise, refinancing costs increase and budgets remain under pressure from public spending commitments.
The United States is particularly important because US Treasury securities play a central role in global finance. They are widely used as reserve assets, collateral and benchmarks for borrowing costs around the world.
The issue is not simply whether the United States can meet its obligations. It is also how those obligations will be financed over time, what interest costs mean for government budgets and how policymakers will balance debt servicing against other priorities.
Governments have several options, including higher taxation, spending restraint, economic growth and refinancing. Monetary policy and inflation can also affect the real burden of existing debt, although inflation brings its own economic and political costs.
There is no single inevitable outcome. Nevertheless, sustained debt growth creates difficult choices, and those choices can influence confidence in fiat currencies over the long term.
Gold has historically attracted interest when investors become concerned about the purchasing power of money and the sustainability of government finances.
2. Inflation can reduce the purchasing power of savings
Inflation does not need to accelerate dramatically to affect household wealth. Even relatively moderate inflation, sustained over many years, reduces the amount of goods and services a unit of currency can purchase.
A bank balance may retain the same numerical value while its purchasing power declines.
This is one reason savers distinguish between holding money and preserving wealth. Cash is useful for liquidity, spending and emergencies, but its real value depends partly on inflation and the interest earned.
Gold offers a different set of characteristics. It does not pay interest, and its price can be volatile, but it has a long history as a store of value across different monetary systems.
That history does not guarantee future performance. It does, however, help explain why gold continues to feature in discussions about protecting purchasing power over long periods.
Read more about the role of gold as money and its history on the FirstGold website.
3. Central banks continue to accumulate gold
One of the most significant developments in the modern gold market has been sustained central bank demand.
Central banks hold reserves to support confidence, facilitate international payments and provide financial flexibility during periods of economic stress. Those reserves traditionally include foreign currencies and government securities, alongside gold and other assets.
According to the World Gold Council, central banks purchased approximately 863 tonnes of gold on a net basis in 2025. Although this was below the exceptionally high levels recorded during the previous three years, it remained historically substantial.
Central bank buying matters because these institutions are not necessarily trading gold in the same way as short term market participants. Their decisions can reflect long term reserve management, diversification and assessments of geopolitical and financial risk.
Gold also differs from foreign currency reserves because it is not issued by another government.
When a central bank holds US Treasury securities, it holds a claim within the US financial system. Physical gold held directly by a central bank does not depend on another government’s promise to pay interest or principal.
This distinction helps explain why gold remains relevant to reserve managers even in a world dominated by electronic payments, sophisticated financial markets and modern monetary policy.
Central bank demand does not establish that a formal monetary reset has been agreed or that gold must rise continuously. It does demonstrate that gold continues to serve a meaningful role in national reserve strategies.
4. The global monetary system is becoming more diversified
The US dollar remains dominant, but countries have increasingly explored ways to diversify their international financial relationships.
These efforts include bilateral trade settlement in local currencies, alternative payment arrangements and changes to the composition of official reserves.
The International Monetary Fund’s latest available Currency Composition of Official Foreign Exchange Reserves data at the time of writing showed the US dollar accounting for 56.7% of allocated global foreign exchange reserves in the second quarter of 2026.
That figure confirms two things.
First, the dollar remains the leading reserve currency by a substantial margin. Claims that it has already lost that position would be incorrect.
Second, the international monetary system can evolve without the dollar immediately losing its dominant role. Diversification can occur gradually, with countries adjusting their reserve holdings and payment arrangements over time.
Gold is relevant to this process because it can be held as a reserve asset without being another country’s currency liability.
The potential result is not necessarily the replacement of the dollar by a single competing currency. It could be a more diversified monetary environment in which gold plays a greater role alongside existing currencies and financial instruments.
Why a monetary reset is increasingly difficult to avoid
At FirstGold, we believe the pressures building within the global financial system make a monetary realignment increasingly difficult to avoid over the longer term.
That is an assessment of the direction of structural pressures, rather than a claim that a particular date has been set for a reset or that a sudden financial collapse is inevitable.
Consider the forces at work: large government debt burdens, ongoing demands for public spending, the purchasing power risks associated with fiat currencies, geopolitical fragmentation and central banks seeking greater flexibility in their reserves.
These forces do not have to produce an overnight crisis to change the monetary system. They can drive incremental changes over many years.
A reset may therefore take the form of a gradual adjustment in how wealth is measured, how international trade is settled, how reserves are held and how investors assess the risks associated with government issued money.
Gold could play a greater role in such a transition because it is globally recognised, has a finite above ground stock and does not depend on the creditworthiness of a single issuer.
But there is an important distinction between gold’s potential monetary role and its market price. Even if the international system becomes more supportive of gold, prices can still experience sharp corrections along the way.
The argument for physical gold is therefore not that every market decline must be followed by an immediate rally. It is that the long term monetary questions remain relevant regardless of short term market movements.
What happens if interest rates rise before gold recovers?
JPMorgan’s forecast highlights a genuine risk for gold holders.
If US interest rates and bond yields rise further, the opportunity cost of holding gold could increase. A stronger US dollar, additional investor liquidations or weaker investment demand could also place pressure on prices.
For Australian buyers, there is another variable: the Australian dollar.
The Australian dollar gold price is influenced by both the international US dollar gold price and the exchange rate. Consequently, a fall in US dollar gold does not automatically translate into an identical percentage decline in Australian dollar terms.
If the Australian dollar weakens against the US dollar, that currency movement can partially offset a decline in the international gold price. If the Australian dollar strengthens, the opposite can occur.
This is one reason Australian buyers should understand the local bullion price rather than relying exclusively on headlines quoting gold in US dollars.
Short term volatility is a normal feature of financial markets. It is particularly relevant when interest rates, liquidity and investor positioning are changing quickly.
For people accumulating physical bullion over time, the important considerations include affordability, transaction costs, the purpose of holding bullion and the ability to tolerate price fluctuations.
Physical gold versus paper exposure
Another important consideration is the difference between owning physical bullion and gaining exposure to gold through financial products.
Gold shares represent ownership in mining companies. Their performance can be affected by production costs, management decisions, financing requirements, labour costs and political risks, as well as the gold price.
Exchange traded products and other paper gold arrangements can provide price exposure, but their legal structures, ownership rights, counterparties and redemption arrangements vary.
Physical bullion held directly offers a different form of ownership. The buyer owns a tangible metal asset rather than relying solely on the performance of a financial instrument or the obligations of an intermediary.
That does not make physical bullion risk free. Buyers should understand the product, verify its authenticity, compare premiums and resale arrangements, and consider secure storage and insurance.
For those whose objective is to hold tangible gold and silver outside conventional financial assets, the structure of ownership matters just as much as the headline price.
FirstGold focuses on 100% physical gold, silver and platinum bullion, with metal held in private vault storage under the platform’s stated arrangements. Customers can accumulate metal over time and review their holdings through their FirstGold account.
Learn more about buying physical bullion with FirstGold and how accumulating metal can work within your personal financial circumstances.
Why accumulating bullion over time can be a different approach
Trying to identify the exact bottom of the gold market is difficult, even for experienced institutional investors.
JPMorgan’s outlook is a useful reminder that gold can fall further before recovering. Other forecasts may differ, and market conditions can change rapidly.
An alternative approach some physical bullion buyers consider is accumulating smaller amounts over time rather than committing all their available funds at one price.
This approach is commonly known as cost averaging. By purchasing at different prices over a period, buyers can spread their entry points rather than relying on a single market prediction.
Cost averaging does not guarantee a profit, prevent losses or ensure that the average purchase price will be lower than the market price at any particular future date. Its practical value is that it can provide a disciplined purchasing framework for people who have already decided that physical bullion forms part of their longer term financial plans.
FirstGold enables customers to accumulate physical bullion in smaller amounts, subject to the platform’s applicable terms and transaction arrangements.
The objective is not to chase every market movement. It is to establish a process that suits the buyer’s budget, intended holding period and reasons for owning physical metal.
Gold’s role in a changing monetary world
There will always be disagreement about the future gold price. Some analysts focus on interest rates, others on inflation, currency movements, investment demand or central bank purchases.
All these factors can influence the market.
But the deeper question is whether the global monetary environment is likely to remain unchanged over the coming decades.
With governments managing substantial debt burdens, central banks reassessing reserve composition and countries exploring more diversified international financial arrangements, it would be unwise to dismiss the possibility of meaningful monetary change.
A monetary reset should not be treated as a guaranteed event on a predetermined timetable. However, the structural pressures that could drive a gradual realignment are real and deserve attention.
Gold has survived the transition from metallic money to paper currencies, the end of dollar convertibility into gold and repeated periods of financial uncertainty. Its continued presence in central bank reserves demonstrates that it has not become irrelevant in the modern monetary system.
For physical bullion holders, that is the bigger story.
The next few months may bring further volatility. Gold may fall before it rises, and forecasts will inevitably change. Yet a short term correction does not resolve the longer term questions surrounding debt, currency purchasing power and confidence in the international monetary system.
The price of gold can fluctuate. The monetary challenges facing the world do not disappear simply because gold has a difficult month.
FirstGold: Build physical bullion holdings over time
FirstGold provides Australians with a way to accumulate 100% physical gold, silver and platinum bullion in smaller amounts, with the ability to monitor holdings through an online account or the FirstGold app.
For people who want to understand the difference between owning physical metal and holding paper exposure, our educational resources explain the fundamentals of bullion ownership, pricing and accumulation.
Explore FirstGold to learn more about buying physical bullion, review the available account features and understand how to get started.
Build wealth one gram at a time.
Disclaimer: This article is for general information and educational purposes only. It is not personal financial advice or a recommendation to buy or sell bullion. Gold and silver prices can be volatile, and physical bullion may incur premiums, transaction costs and storage or delivery costs. Forecasts are uncertain and a monetary reset is not a guaranteed event or a prediction of imminent financial collapse. Consider your own circumstances and seek independent professional advice where appropriate.
-
JPMorgan forecast: The 29 October report supports the near-term downside risk, possible Federal Reserve rate increases and potential 2027 recovery. The price targets are attributed as reported forecasts, not promises.
Mining.com.au+1 -
Central bank gold purchases: The World Gold Council reported net purchases of approximately 863 tonnes in 2025.
World Gold Council -
US dollar reserve share: The IMF reported a 56.7% dollar share of allocated foreign exchange reserves in Q2 2026. This measures foreign currency reserves, not every component of official reserves or the entire global monetary system.
IMF Data -
Monetary reset: This is presented as FirstGold’s analysis of structural pressures, not as an established fact that a formal reset has been scheduled or is certain to occur at a particular time.
