Note

Fed cannot sustain S&P 500 rally forever, gold to flourish

· Reading 329

The Federal Reserve has left its policy unchanged, painting a gloomy picture whereas an open door to doing more implies further dollar weakness, exacerbating the falls. Stocks – that have benefited greatly from Fed support – may eventually run out of steam, according to FXStreet’s analyst Yohay Elam.

Key quotes

“The Fed's acknowledgment of the deterioration is accompanied by a clear message – we will do more. Jerome Powell, Chairman of the Fed, may follow through with either more of the current tools such as more lending programs or standard bond-buying – or new ones, such as Yield Curve Control."

“Flooding the markets with more dollars implies it may further lose value. The greenback's unique position as the world's reserve currency means cheap lending conditions could send funds overseas, boosting other currencies.” 

“For gold, the Fed's commitment to do whatever it takes – even if that does not include negative interest rates – means more room to rise. Alongside much-hyped markets, forecasts for $2,300 or $3,000 for XAU/USD seem less outlandish.”

“The S&P 500 Index is around the break-even level for 2020 – mostly fueled by Fed action. Does more help mean more increase? At some point, there is a limit. Investors cannot take the Fed's help while ignoring the reason for all this effort. Markets may look at the Fed's underlying reason for supporting the economy and turn south as well.”

Reprinted from FXStreet.com,the copyright all reserved by the original author.

https://www.fxstreet.com/news/...

Disclaimer: The content above represents only the views of the author or guest. It does not represent any views or positions of FOLLOWME and does not mean that FOLLOWME agrees with its statement or description, nor does it constitute any investment advice. For all actions taken by visitors based on information provided by the FOLLOWME community, the community does not assume any form of liability unless otherwise expressly promised in writing.

If you like, reward to support.
avatar

Hot

No older comments, be the first to grab the sofa.

CFD markets involves substantial risk and there is always the potential for loss. Past performance is not indicative of future results. You understand and agree that there are risks associated with the use of online trading services ( COPYTRADE、FOLLOWTRADE、FOLLOWGUARD ), including uncontrollable factors such as hardware breakdown, software fault, or Internet disconnections. FOLLOWME does not held any responsibility for the communication failures, miss-transmissions or delays that occur during online trading.

appstore-download goole-download
login