Jessica Amir
Market Strategist
Summary: What investors need to perhaps consider now the S&P500 hit a new five-month high and marked its first ‘golden cross’ in 2.5 years. We cover what it could potentially mean for equities and investors over the next 6-12 months. Plus, why the longer term operating outlook for Gold companies is getting brighter; with some ETF flows surging 100-400% so far this year.
The S&P500 has now gained 19% since its October low. And overnight a key technical milestone was achieved for the first time in 2.5 years; the S&P500’s 50-day moving average crossed above the 200-day moving average, forming a “golden cross”. For investors, this means stocks could potentially continue to rally over the next six to12 months if history repeats itself. That said, this event doesn’t guarantee gains. A ‘golden cross’ event has occurred 52 times since 1930. In that time, stocks were trading higher one year later, in 71% of the instances. So while this is helpful to know - suggesting stocks could have more room to run, we need more indicators for confirmation, such as for S&P500 earnings. They need to continue to beat expectations and also rise. And also we need to see more signs that US inflation is in ‘disinflationary phase’, as the Fed suggests.
Gold companies and ETFs are getting more popular among investors. Not only as the gold price has gained 17% from its cycle low, but importantly, gold companies outlooks could also improve if; gold continues to rally, hits $2000, and banks eventually ease interest rates. Throughout historically gold has generally rallied strongly when the Fed pauses and cuts interest rates. The market is perhaps pre-empting this. Another factor contributing to the ‘gold rush’ is that central banks are increasing their gold holdings, as we’ve been alluding. Positions in gold ETFs have grown considerably this year, with the largest gold ETF fund globally, VanEck Gold Miners ETF (GLD), seeing inflows rise 400%, suggesting retail are increasing their positions. Other popular gold ETFs so far this year include iShares Gold Producer UCITS ETF (IAUP) and iShares MSCI Global Metals and Mining Producers ETF (PICK) with inflows into those ETFs rising over 100% this year.
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Uncover the shifting focus in 2024's FX markets towards growth resilience and relativity, away from bond yields and inflation stories.
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