When gold and silver experienced one of their most brutal selloffs in decades last Friday, you might have expected Wall Street's bullish forecasters to quietly walk back their predictions. Not JP Morgan. The bank doubled down instead.

In a note released late Sunday, JP Morgan maintained its year-end target of $6,300 per ounce for gold, arguing that the fundamental drivers behind the metal's recent rally haven't changed. The recent crash? Just noise.

"We remain firmly bullishly convinced in gold over the medium-term on the back of a clean, structural, continued diversification trend that has further to run amid a still well-entrenched regime of real asset outperformance versus paper assets," the bank stated.

The core thesis centers on two powerful forces: central banks continuing to diversify away from the U.S. dollar, and sustained investor demand for physical assets. JP Morgan expects official-sector gold purchases to hit around 800 tons in 2026, calling this diversification trend "unexhausted." Translation: central banks aren't done buying, and that provides a floor even when volatility goes haywire.

Reality Check: Monday Morning Carnage

That optimistic long-term view looked somewhat detached from Monday morning's market action. Gold extended its selloff, falling to $4,401 per ounce, while silver dropped to $71.30. Investors were still unwinding leveraged positions in what looked like a classic forced liquidation spiral.

The abrdn Physical Precious Metals Basket Shares ETF (GLTR) is up 13.74% year-to-date, though much of that gain evaporated in Friday's massacre.

The Warsh Trigger and Margin Mayhem

So what sparked the chaos? Friday's crash saw gold log its sharpest one-day decline since 1983, plunging more than 9%. Silver had it worse, collapsing around 27% in its worst daily decline on record. The selling accelerated after President Donald Trump nominated Kevin Warsh as the next Federal Reserve chair.

"The Warsh nomination, whilst likely being the initial trigger, did not justify the size of the downward move in precious metals, with forced liquidations and margin increases having a cascading effect," noted KCM Chief Market Analyst Tim Waterer.

And then CME Group piled on. The exchange raised margin requirements yet again, pushing COMEX gold margins from 6% to 8% and silver margins from 11% to 15%. Higher margins mean traders need to post more collateral, which typically triggers selling as speculators either exit positions or get forced out by margin calls.

Here's the weird part: even after multiple margin hikes and a switch to dynamic margin calculations, precious metals kept climbing until the end of last week. Then everything broke at once. That's what makes this so interesting. The structural support JP Morgan is betting on has been real. The question is whether Friday's crash was just a violent deleveraging event or something more fundamental.

For now, JP Morgan is betting on the former. We'll see if central banks agree.