Gold Price Forecast – Surging Hospitalization Rates Will Trigger More LockdownsThe recent uptick in coronavirus cases is alarming. Hospitalizations are surging in the Midwest, and regional lockdowns are becoming likely. Gold is trading lower on vaccine developments, and prices may not bottom until December.
THE SECOND WAVE OF COVID
Coronavirus cases are on the rise, and I do not see this trend slowing. New daily cases in the US reached 187,907 on Friday – a surge of 80% in just two weeks. The Midwest is being hit particularly hard.
Some argue that the surge in daily cases is because of more testing. True, but what concerns me is hospitalizations. The graph below shows that COVID-19 hospitalizations rose to 69,455 and broke out above the initial April and July peaks.
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The regional hospitalization map shows a spike in the Midwest (recently 23,849) and more than double the May 6th peak of 11,483. It is important to note that there is a 2 to 4-week lag from when someone tests positive to hospitalization – suggesting the current spike could continue into late November. As hospital resources are overwhelmed, governments will enforce lockdowns and issue new stay-at-home orders.
Death rates in the Midwest are also reaching new highs. Considering the lag time (mentioned above), this trend is likely to increase over the next several weeks. The Midwest is likely to resume lockdowns soon, and that could send stocks sharply lower.
Gold formed an inverted cycle peak in the November timing window, pushing the 6-month target out to December. Gold could bounce here or there, but the intermediate trend is lower. Volatile price swings will continue over developments on the vaccine front, elections, and resumed lockdowns. I do not recommend trading these swings; they are too unpredictable. Our overall forecast supports a decline to around $1750 or lower by year-end.
The days surrounding December 29th, 2020, are of particular interest and could time the next major low in gold. We are very bullish long-term and believe gold will exceed $10,000 this decade.
AG Thorson is a registered CMT and expert in technical analysis. He believes we are in the final stages of a global debt super-cycle. For more information, please visit here.