If you consider gold an asset to be held during times of economic uncertainty, you would be correct as the metal continued its ascent toward the $1,300 level during yesterday’s session.
Stocks drifted and gold’s rise was a reaction to the Fed’s announcement Tuesday that they were ready to do whatever it took to support the economy. As I posted yesterday, that announcement pushed interest rates and the dollar lower. Confusion still reigns as to what event may trigger the Fed’s move into lending an assist.
Disappointing news on home prices kept the markets meandering with a downside bias. More economic reports are on the agenda today with existing home sales and jobless claims taking center stage. After the close, heavyweight Nike will present its quarterly earnings report.
I think that from here on forward any economic reports will be scrutinized even more to see if on any weakness the Fed can be prompted to step in to attempt to right the ship.
Of course, that event by itself would be a clear sign that things are not well in economic wonderland, which may have some dire consequences on market direction. Unless, of course, you believe that the Fed has indeed the power to avoid a slip into another recession.