J.P. Morgan: Central bank gold buying accelerates; US copper mine expansion constrained by smelting

Central bank gold buying is accelerating. Why are gold prices still under pressure?

World Gold Council data show that global central banks bought a net 321 tonnes of gold in the third quarter of 2026, the fastest pace since 2024. Year-to-date purchases totalled 675 tonnes, up 6% from the same period in 2025. Global gold ETFs added 211 tonnes over the same period, reversing net outflows in the second quarter.
High prices suppressed physical consumption: third-quarter gold jewellery consumption fell 17% year on year to 313 tonnes, the weakest third quarter in the data series; investment in bars and coins fell to a four-year low of 268 tonnes.
JPMorgan sees gold and gold mining equities becoming more attractive, but gold prices could still fall further to $3600–3700 per ounce. Turning-point scenarios the bank is watching include a shift from high energy prices and high interest rates to a recessionary environment, or a renewed market shift towards risk appetite.

US mined copper production has fallen by about half over the past approximately 30 years and currently stands at around 1 million–1.1 million tonnes a year. JPMorgan says policy support has brought final investment decisions forward, and the US copper mine project pipeline represents roughly 1.3 million tonnes of annual capacity, but most will not become supply until after 2030.
Project construction costs are high: average capital intensity for US copper mine projects is about $28 thousand per tonne of annual capacity, above the global figure of approximately $24 thousand–26 thousand. Water and domestic processing constraints could push costs higher.
The more pressing bottleneck is smelting. The two main US primary copper smelters have combined nominal annual capacity of about 550 thousand tonnes, with roughly 130 thousand tonnes of spare capacity after higher utilisation. The bank expects the US refined copper deficit, excluding tariff-related disruptions, to remain at about 1 million tonnes a year by the end of the decade.
One of the biggest variables is the Resolution project, jointly owned by Rio Tinto and BHP, with planned annual capacity of about 600 thousand tonnes, close to half the US project pipeline. But the bank expects a final investment decision to be unlikely before 2030; initial investment is estimated at about $20 billion, and a potential smelter could require another more than $5 billion.

Europe entered the 2026–2027 heating season with natural gas inventories at their lowest level since 2013. The report says temperatures across most of continental Europe were expected to be 2–5 degrees Celsius below normal that week, and the cold spell would test inventories.
The power generation mix has changed: German fossil-fuel generation was expected to rise that week to its highest level since February, while France restarted a coal-fired power plant for the first time in nearly a year.
Brent crude was influenced by diplomatic news and closed the day essentially unchanged at $104.35 a barrel, but traded between $101 and $107 during the session; conflicting news about a US-Iran agreement drove prices back and forth.

JPMorgan foreign-exchange strategists expect the dollar could weaken by 1%–2% if Democrats sweep Congress; if Republicans perform unexpectedly well and retain the Senate, the dollar could strengthen modestly.
The report says a weaker dollar would theoretically support demand for metals and commodities, but investors are also watching for potential AI regulation following a Democratic victory. Gold and copper have been closely tied to risk-appetite trades over the past two years, so metals could also fall if markets sell off.
Historically, over the past 30 years, the materials sector has gained an average of 13% in the six months following US midterm elections. Energy sector performance has been inconsistent, with negative average returns at three, nine and twelve months and a positive return at six months.