Spot Gold Rises $7, Hits New High Above $2606/Oz

Did you know?

In the early hours of September 19th, the Federal Reserve waved its hand and the federal funds rate "whoosh" dropped by 50 basis points, the first time since March 2020!

The investors in the market had anticipated a rate cut by the Fed, but they didn't expect such a strong move, which exceeded expectations.

Suddenly, the market became lively, like a celebration, with all kinds of assets jumping around, bustling with activity.

Look at the U.S. stocks, they soared as soon as the rate cut news was released, the three major stock indices acted like they were on a stimulant, setting new highs was a piece of cake.

But who knew, Mr. Powell, the Fed Chairman, later poured a bucket of cold water on everyone.

What did he say?

Well, it was something like that, the rate cut is one thing, but we still have to guard against risks.

As a result, U.S. stocks, the dollar, and gold all returned to their original state, the closing was quite bleak.

Zhou Hao, the economist from Guotai Junan, said outright that the market felt like it had been deceived, a rate cut of 50 basis points, but in the end it felt like only 25 basis points.

Speaking of U.S. stocks, they are the darling of global investors.

Ping An Securities' research report said that in the short term, U.S. stocks should be approached with caution, why?

Unstable U.S. economic data and the upcoming elections, these two factors mixed together, how could it not be chaotic!

But in the long term, they are still optimistic, after all, the foundation of the U.S. economy is there.

However, in the near term, one must be cautious and not rush in blindly.

Looking at Japan, the Nikkei 225 index soared like Popeye after eating spinach.

But, the Bank of Japan's interest rate meeting on the 20th should also be watched, the yen's exchange rate has been rising, almost touching the threshold of 140.

Experts from Huatai Securities said that the yen will continue to rise in the medium to long term, why?

The monetary policies of the U.S. and Japan are getting closer, and Japan's own economy is slowly recovering, how could it not rise!

The assets of emerging markets have benefited from the Fed's rate cut this time.

Look at the MSCI Asia Emerging Markets Index, our Shanghai Composite Index, India's SENSEX 30, Vietnam's Ho Chi Minh Index, they all turned red!

Why?

Valuations are cheap, policy space is large, the attractiveness can't be small, can it?

Barclays, Ping An Securities, and other big players all said that once the Fed cuts rates, emerging markets become a hot cake, and funds are pouring in here!

Speaking of gold, it's been the star product of the year, with prices continuously rising.

As soon as the Fed's rate cut was announced, the gold price directly hit a new high of $2600 per ounce, but then it gave it back.

Why?

Chen Jierui from Jia Sheng Group said that the gold price had already digested the good news of the rate cut, and as soon as Powell said that there might not be a continuous large rate cut in the future, the gold price naturally fell back.

However, experts also said that in the medium to long term, gold is still worth our attention.

Finally, we have to talk about the art of asset allocation.

Liu Gang from CICC, he's an old hand, he summarized the performance of various assets during the historical rate cut cycle.

He said that generally before the rate cut, assets like U.S. Treasury bonds and gold perform well; after the rate cut, industrial metals and crude oil start to gain momentum.

So, when we invest, we also need to learn to read the wind and adjust the course, don't stick to one basket of eggs stubbornly.

In short, this time the Fed's rate cut is like throwing a pebble into the global financial market, causing ripples after ripples.

Although we older people may not be able to directly participate in this "dance", understanding more of these tricks can also make our money bags more secure and more valuable, right?