J.P. Morgan's Gregory Shearer, head of Base and Precious Metals Strategy, stated in a recent interview that the Federal Reserve's hawkish pivot has materially prolonged the pause in gold's structural price rally, shifting near-term investment focus toward base metals. The bank forecasts oil supply through the Strait of Hormuz will reach 68% of pre-conflict levels by July and approach 100% through 2026, with Brent crude averaging $86 per barrel in Q3 '26 and $80 in Q4 '26. On April 9, Tai Hui, J.P. Morgan's chief market strategist for Asia Pacific, said gold's 24% selloff during the Iran conflict—from $5,415 to $4,100 per ounce in the first 20 days—weakened its status as a defensive hedge. The commodity outlook reflects ongoing market rebalancing following geopolitical disruptions and central bank policy shifts affecting metals demand dynamics.
J.P. Morgan Forecasts Gradual Oil Supply Recovery Through 2026
Shearer said J.P. Morgan's supply estimates assume gradual resumption of oil flows through the Strait of Hormuz, reaching approximately 68% of pre-conflict levels by July. The forecast projects supply will increase through the rest of the year and into 2026, approaching 100% restoration. "It does jump quite a lot over the summer, and then it's a long tail of supply resumptions," Shearer stated.
The bank expects OECD commercial inventories to drive price forecasts. Recent IEA data shows the market rebalancing—a cumulative shortfall of close to 1.6 billion barrels between late February and August—is still tracking expectations. Shearer noted that OECD commercial inventory decline has been materially less than expected, indicating larger demand destruction in the market.
J.P. Morgan forecasts Brent crude will average $86 per barrel in Q3 '26 and $80 per barrel in Q4 '26, exiting the year at approximately $78 per barrel. For 2027, the average price forecast is $64 per barrel. "What we're seeing from a balance and recovery perspective actually still does imply that prices over the second half of the year are going to trade well above what is currently embedded into the oil forward curve," Shearer said.
Fed Hawkish Stance Extends Gold Rally Pause
Shearer described the Federal Reserve's hawkish communications from Kevin Warsh and the last FOMC meeting as turning "this pause in the structural bullish gold story into a bit of a deeper freeze." He stated there is "a very large lack of engagement as long as the specter of rate hikes are hanging over this market."
Tai Hui said during an April 9 media briefing that gold "did not work as a hedge against geopolitics" during the Iran conflict. Gold fell from a high of $5,415 to a low of $4,100 per ounce in the first 20 days from when attacks on Iran began—a 24% peak-to-trough loss. Hui stated gold's correlation with equities or risk assets is "not very consistent" and its performance during geopolitical events over the past 30 years shows a "50/50" track record.
"We've been arguing for quite some time that gold is not a very good hedge against anything," Hui said. He noted gold's volatility matches emerging market equities and it does not generate income. "Gold, to us, is still an interesting asset to be included in asset allocation, but we just need to understand that in terms of the role it plays, it's more of a return enhancement rather than a risk management tool."
Despite near-term headwinds, Hui said long-term demand from central banks diversifying away from the U.S. dollar and investors hedging against government debt growth support gold as an investment asset. On Feb. 17, J.P. Morgan's Kriti Gupta and Justin Biemann wrote that gold has rallied over 170% in the last five years, driven by geopolitical volatility and fragmentation. They stated the case against gold's continued appreciation is wrong.
Copper Positioned for Price Gains on U.S. Tariff Review
Shearer said J.P. Morgan has shifted focus to copper for the balance of 2026. "What we see in copper is actually quite a structurally supported fundamental backdrop, seeing essentially a global industrial upturn," he stated. The bank expects stronger momentum in China in the second half of '26 while mine supply remains "very anemic."
The bank identifies a U.S. tariff review for refined copper in the second half of this year as the biggest single factor for price movement. Shearer described a "tug of war for copper" between the U.S. and China that leaves ex-U.S. market balances "exceptionally tight." J.P. Morgan's view is that the U.S. will structure refined copper tariffs to keep imports attractive, "ultimately opening the door for copper prices to push up towards around $15,000 per metric ton."
FAQ
What did J.P. Morgan say about gold's recent performance?
Gregory Shearer stated the Federal Reserve's hawkish pivot has materially prolonged the pause in gold's structural price rally. Tai Hui said on April 9 that gold fell 24% from $5,415 to $4,100 per ounce in the first 20 days of the Iran conflict, weakening its status as a defensive hedge.
What are J.P. Morgan's oil price forecasts for 2026?
J.P. Morgan forecasts Brent crude will average $86 per barrel in Q3 '26, $80 per barrel in Q4 '26, and exit the year at approximately $78 per barrel. The bank expects oil supply through the Strait of Hormuz to reach 68% of pre-conflict levels by July and approach 100% through 2026.
Why does J.P. Morgan expect copper prices to rise?
Shearer said copper has a structurally supported fundamental backdrop with global industrial upturn and stronger China momentum expected in the second half of '26. The bank forecasts a U.S. tariff review for refined copper in the second half of the year will keep U.S.-China competition for copper ongoing, opening the door for prices to reach $15,000 per metric ton.
