The Magazine for Asian Investors
The Fed meeting minutes have caused enough uncertainty among investors on Wednesday. Even though the number of reported jobless claims was lower than expected, major indices such as the S&P 500 and Dow Jones are falling.
The Fed plans to begin tapering and reduce quantitative easing as early as this year. For many investors, this will have awakened memories of 2013, when tapering led to sharp sell-offs in the short term at that time.
Nevertheless, there is still disagreement among the participants regarding the plans. Many see the tapering plans as too early, as the delta variant still continues to provide rising contagion. Moreover, another Covid wave is already predicted for the autumn. This could slow down the economic recovery.
Another point that should be noted is the employment numbers. The Fed has made it clear that employment figures are still far from reaching the desired level.
Still unclear is the further strategy in interest rate policy. Even if the Fed wants to start tapering earlier than planned, this will not necessarily have an impact on interest rate policy. The low-interest-rate policy could therefore remain with us for some time to come.
Gold has so far reacted relatively stable to the news and is still just below the $1800 mark. Even if short-term fluctuations are possible, the fundamentals that speak for rising gold prices are still given.