In a recent interview with Francine Lacqua of Bloomberg Television, J.P. Morgan’s global head of investment strategy, Grace Peters, was discussing her firm’s continuing affection for gold amid relentless central bank demand as well as the desire of investors to achieve more comprehensive strategic diversification when she said something that appears to have slipped under the radar of many observers: namely, that her confidence in gold surpassing $4,000 next year is undiminished even if economic conditions ultimately prove to be relatively positive.
Thriving gold? In an upbeat economic climate?
J.P. Morgan Sees Safe-Haven Gold Thriving in “Positive Growth” Environment
While Peters and her team don’t have an overly robust global economic outlook for the next 12 months, it is broadly optimistic, as she told Lacqua:
“The notion that growth is going to be positive, corporate earnings will be positive, the Fed will cut a bit, but not extensively, is the backdrop that we see.”
Peters went on to clarify that she sees the best allocation posture in that environment as one in which investors are “still being pro-risk here, but in an intentionally diversified way.”
Gold is critical to achieving that “intentional diversification,” Peters believes. But serving as another key source of energy for gold on its path to $4,000, says the analyst, will be demand for the metal that tends to be unique to favorable economic climates – not exactly the conditions one normally thinks of as being ideal for safe-haven assets.
“In that backdrop, [with] GDP being positive, demand for gold through tech and jewelry channels [could] also be reasonably resilient,” Peters explained.
The More You Know: Consumer Demand for Gold Accounts for 40% of Overall Demand, Says World Gold Council
Those aware of just how potent gold’s consumer demand can be in productive economies likely know that Grace Peters’ reference to it as a critical price driver is no incidental mention. In fact, according to a World Gold Council (WGC) report released earlier this year, consumer demand for jewelry and electronics accounts for roughly 40% of overall gold demand.
And as the WGC notes, that consequential consumer demand is – unsurprisingly – more vigorous as economic conditions improve:
“During periods of economic uncertainty, it is the counter-cyclical investment demand that drives the gold price up. During periods of economic expansion, the pro-cyclical consumer demand supports its performance.”
Asset management behemoth State Street Global Advisors agrees. In their own 2025 report on gold’s suitability as core portfolio holding, State Street analysts said much the same thing as the WGC about the capacity of gold to serve investors in superior economic climates:
“Economic growth is a key strategic driver affecting gold’s long-term performance and potential investment benefits. Economic expansions lead to cyclical increases in demand for gold, as it is a key component not only in jewelry but also in certain technology products and industrial applications. Economic growth also tends to increase demand from savers.”
Savvy readers aware of gold’s historical tendency to remain fundamentally uncorrelated to equities understandably might have difficulty reconciling that general truth with the idea that gold could thrive alongside those instruments in upbeat economies. But here’s where things get really interesting.
An Ideal Hedge? Research Finds Gold Negatively Correlated With Equities in Down Markets…but Positively Correlated in Up Markets
In a comparison of gold to the S&P 500, council analysts found the metal to be more positively correlated with equities during periods when the weekly returns of the latter increase by more than two standard deviations.
And when equities fall by more than two standard deviations? In those cases, gold is more negatively correlated with stocks, according to the WGC.
These conclusions raise the possibility that gold may have the potential to perform in about the most desirable way possible as a hedge against high-flying equities; that is, as an asset prone to effectively diversifying portfolios when stocks are being rattled…but strengthening alongside stocks in more encouraging market climates.
As the World Gold Council puts it:
“When equities rally strongly their correlation to gold can increase. This is driven by a wealth effect supporting gold consumer demand, as well as demand from investors seeking protection against higher inflation expectations.”
Despite Risk Asset Strength, “Gold Has Performed Well Over the Past 1, 3, 5, 10 and 20 Years”
Among the better pieces of evidence pointing to gold’s value as a fair-weather friend to investors is the metal’s impressive performances over multiple periods of time…a record that would be unlikely if gold thrived only in its capacity as a safe haven during bouts of acute distress.
“Gold has performed well over the past 1, 3, 5, 10 and 20 years,” the WGC notes, “despite the strong performance of risk assets.”
Indeed, gold has acquitted itself as being among the very best performing assets of the millennium so far, rising more than 1,100% since January 2001.
In fact, the WGC notes that evidence of gold’s ability to stand toe to toe with stocks for extended periods stretches back more than 50 years:
“Looking back over more-than half a century since the US gold standard collapsed in 1971, the price of gold in U.S. dollars has increased by 8% on an annualized basis – a performance comparable with that of equities and higher than that of bonds over the same period.”
To be sure, gold’s most spirited price performances – along with its most reliable sources of strength – will remain rooted in its potential to serve as a hedge against just about all manner of uncertainty. But as the World Gold Council makes clear…and as J.P. Morgan’s Grace Peters obviously recognizes…gold also has a great deal to offer during those times when the sky not only isn’t falling, but even looks rather promising; a frequently overlooked reality that further underscores its appropriateness as a core portfolio holding.
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