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Gold Price Prediction – Prices Rise Slightly on JP Morgan Growth Forecast

By:
David Becker
Published: Nov 20, 2020, 19:18 UTC

JP Morgan expects the US economy to contract in the Q1

Gold Price Prediction – Prices Rise Slightly on JP Morgan Growth Forecast

 

Gold prices edged higher but remain rangebound. The US dollar moved higher along with US long-term yields but this did not impact the movement of the yellow metal. Gold implied volatility eased after rallying slightly on Thursday. JP Morgan is now forecasting that US growth will contract in the Q1 of 2021, as the virus continues to spread.

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Technical analysis

Gold prices edged higher but ran into resistance near the 10-day moving average at 1,875. For the week prices declined by 0.84%. Support is seen near the October lows at 1,850. Short-term momentum has turned negative as the fast stochastic generated a crossover sell signal. The current reading on the fast stochastic is 17, below the oversold trigger level of 20, which could foreshadow a correction. Medium-term momentum is neutral to negative as the MACD (moving average convergence divergence) histogram prints in the red with a declining trajectory which points to consolidation.

JP Morgan Sees Economic Contraction

JPMorgan economists appear to be the first of the major banks to forecast that the Q1 will contract due to the spreading coronavirus. Most of the Wall Street Banks still forecast that the US economy will expand in the Q1. JP Morgan project that the Q1 will contract by 1% after growth of 2.8% in the Q4. For the Q2, they see the economy rallying and growth of 4.5% followed by a robust 6.5% in Q3.

About the Author

David Becker focuses his attention on various consulting and portfolio management activities at Fortuity LLC, where he currently provides oversight for a multimillion-dollar portfolio consisting of commodities, debt, equities, real estate, and more.

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