JPMorgan Chase Expects Gold to Go Higher in 2019



JPMorgan Chase

JPMorgan Chase (JPM) thinks that gold prices (GLD) should go higher. Right now, the Fed is patient on rate hikes. JPMorgan Chase thinks that the Fed will likely hold off on rate hikes well into 2020. Talking about the recent decline in gold prices, JPMorgan Chase thinks that gold’s (NUGT) uptrend has temporarily stalled.

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TIPS and gold

As reported by Bloomberg, in February, JPMorgan Chase said that it considers TIPS (Treasury inflation-protected securities) (TIP) and gold as the best choices as a refuge from rising prices. JPMorgan Chase strategist John Norman said, “TIPS and gold seem like the most durable inflation hedges for a unique macro environment when the Fed’s reaction function isn’t the only regime change impacting real assets.”

JPMorgan Chase also likes gold (NUGT) (IAU). The Fed could depress real yields to spur the economy (SPY) (VTI), which would undermine the dollar (UUP) (USDU).

Positives for gold

Among the Fed’s two objectives, maximizing employment has been reached. The unemployment is close to a 50-year low, while wages are increasing. The second objective is price stability. The objective hasn’t been met yet. Inflation has been running below the Fed’s target of 2.0%. Several Fed officials commented that the Fed might consider letting inflation run above its target to make up for the periods with lower inflation.

Lower interest rates and higher inflation could be a unique set of positive conditions for gold.

In November 2018, JPMorgan Chase guided for gold prices pushing towards $1,400 per ounce by the end of the final quarter of 2019.


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