By ForexTime
An anticipated pivot by the Federal Reserve to rate cuts, geopolitical risks and the US elections among other factors could translate to heightened volatility!
Here are 3 assets that may see big moves in 2024:
After gaining more than 24% in 2023, things could spice up for the S&P 500 in the new year due to growing noise around the US presidential elections in November.
Based on all major polls, there is strong possibility of another standoff between Biden and Trump, with the latter currently leading taking a lead.
Signs of cooling inflation have boosted bets around the Federal Reserve cutting rates in 2024 while optimism is growing around the US economy heading for a ‘soft landing’.
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As things stand, markets are predicting that the Fed’s benchmark rates will be 150 basis points lower by end-2024.
These expectations along with the rapid growth of artificial intelligence may turbocharge tech stocks which account for roughly 29% of the S&P500 weighting.
The S&P500 may struggle to push higher if US rates remains higher for longer.
Should the US economy experience a “hard landing” this could sour risk appetite, pressuring the S&P500 as a result.
The SPX500 looks to be trending higher with bulls back in control on the weekly/monthly timeframe.
The Bitcoin hype could go into overdrive in 2024 amid growing expectations around the United States allowing its first spot Bitcoin ETF.
Indeed, investors are incredibly hopeful following a wave of applications from asset-management titans, such as BlackRock, coupled with the SEC’s loss in court against Grayscale rejected application.
In fact, the first batch of US spot Bitcoin ETFs are expected to be approved by January 10th according to Bloomberg Intelligence.
A spot bitcoin ETF is a big deal as it provides investors with an easier and supposedly more reliable access to the world’s largest cryptocurrency without having to purchase it directly.
The so-called Bitcoin halving due in April 2024 is also seen as anther bullish catalyst.
Historically, the coin has reached new record highs after the last three halvings.
Bitcoin’s halving will half the amount of tokens that miners receive as reward for their work.
Bitcoin may slip if the ETF approval takes longer than expected. Should the SEC decide to reject all the applications, the cryptocurrency could experience a heavy selloff.
Even if a spot Bitcoin ETF is approved, the cryptocurrency may respond in a lacklustre fashion if the ETF fails to attract inflows despite the hype.
Traders also may end up adopting a ‘buy the rumour, sell the fact’ response to Bitcoin’s halving announcement with the expected rally to new record highs being delayed.
Bitcoin is turning bullish on the weekly charts with prices respecting a weekly bullish channel.
The outlook for gold shines brights in 2024 thanks to fundamental forces but technicals could throw a wrench into the works.
After surging to a fresh all-time high at $2135 in December, gold bulls could switch things up as the Fed prepares for its first rate cut since March 2020.
Signs of cooling inflation in the United States and across the world have fuelled speculation for a global central bank pivot. This development is likely to weaken the dollar along with Treasury yields, keeping gold buoyed.
According to Fed Funds futures, the Fed is expected to cut rates as much as 150 basis points in 2024, creating an environment for gold to glitter.
Note: Gold pays no interest, so lower rates reduce the income foregone by not holding other assets.
Gold could tumble if markets have gotten ahead of themselves in terms of US rate cut timings.
Most Fed officials have forecast that the US central bank could cut rates by 75 basis points in 2024, essentially half the 150 basis points expected by traders. This possible disconnect could spoil the party for gold bulls.
Watch out for the aggressively bearish weekly candle back in December.
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