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U.S. stocks experienced volatility on Wednesday following the Federal Reserve's announcement of a quarter-point rate cut, which was anticipated. The Fed's updated projections indicated higher inflation and fewer rate cuts expected in 2025, leading to a downturn in the markets.
UBS strategists anticipate a continued rally in gold prices, projecting them to reach $2,900/oz by the end of 2025. Key drivers include central banks' ongoing gold accumulation, rising investor demand for safe-haven assets amid geopolitical uncertainties, and expected lower interest rates. They recommend a 5% allocation to gold in USD-based balanced portfolios as a diversifier.
UBS strategists predict a continued rally in gold prices, projecting them to reach $2,900/oz by the end of 2025. Key drivers include central banks' ongoing gold accumulation, rising investor demand for safe-haven assets amid geopolitical uncertainties, and anticipated lower interest rates. They recommend a 5% allocation to gold in USD-based balanced portfolios as a diversifier.
UBS forecasts gold prices to reach $2,900/oz by the end of 2025, driven by central bank demand, rising investor interest, and a lower interest rate environment. Despite a recent dip, gold has risen nearly 29% year-to-date, outpacing the S&P 500. Central banks are expected to purchase over 900 metric tons in 2025, while geopolitical risks and a weaker dollar are likely to boost gold's appeal as a safe-haven asset.
Gold prices have surged 29% this year, with analysts predicting continued gains through 2025 as central banks increase their gold purchases, driven by diversification and geopolitical uncertainties. The IMF reports a revised expectation of 982 metric tons in gold acquisitions for the year, with a forecast of at least 900 metric tons in 2025. Additionally, anticipated interest rate cuts and a weakening US dollar are expected to further bolster gold's appeal, with prices projected to reach $2,900 per ounce by the end of next year.
European MP Sarah Knafo has called for the EU to establish a Strategic Bitcoin Reserve, opposing the European Central Bank's digital euro initiative. She argues that Bitcoin serves as a decentralized safeguard against inflation and poor monetary policies, citing El Salvador's successful adoption of Bitcoin as legal tender as a model for European nations to follow. Knafo warns that the ECB's digital euro could lead to excessive centralized control, advocating instead for financial independence through Bitcoin.
Bank of America’s December Global Fund Manager Survey indicates a potential "sell" signal for risk assets, with cash levels at a three-year low and a significant bullish sentiment among investors. The average cash allocation among fund managers has fallen to 3.9%, triggering a contrarian indicator that historically suggests a market peak. Previous instances of similar cash levels have led to negative returns in global equities, while current allocations show a preference for US stocks and global banks, despite a notable underweight in European equities.
Asian markets opened mixed, with the Nikkei 225 and ASX 200 gaining while the Kospi fell. Concerns over China's economic recovery persist as November retail sales rose only 3.0%, below expectations, indicating limited success of stimulus measures. The Hang Seng index has struggled to maintain its recent gains, with potential declines ahead. Attention now shifts to US retail sales data, expected to show resilience in consumer spending, as the Federal Reserve prepares for a slower pace of rate cuts.
IG
Asian markets are mixed, with the Nikkei and ASX gaining while the KOSPI declines. China's economic recovery shows signs of slowing, as November retail sales fell short of expectations, raising concerns about consumer confidence and demand. The Hang Seng Index is unwinding its December gains, with potential support levels being closely monitored. Economic focus shifts to upcoming US retail sales data, expected to reflect resilience in consumer spending.
IG
The Federal Reserve is expected to implement a 25 basis point rate cut in December, potentially lowering rates to 4.25% to 4.50%, contingent on inflation and employment data. In contrast, the Bank of England is likely to maintain its rate at 4.75%, balancing inflation control with economic growth.Market volatility is anticipated around both central bank meetings, particularly affecting currency pairs like GBP/USD and interest rate-sensitive sectors. Key economic indicators, including inflation and wage growth, will be crucial in shaping future monetary policy decisions into 2025.
IG
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