FxPro Financial Services Ltd | Sep 21, 2021 04:16AM ET
The Dow Jones experienced its worst drop in 10 months on Monday, falling 600 points or 1.8%. The S&P 500 index lost about the same amount, 1.7%. The dollar index climbed to monthly highs, trading above 93.0.
Intraday, the S&P 500 had fallen more than 5% from early September peaks at one point, interrupting a 10-month streak of gains when the index did not experience such pullbacks.
Buying in gold and gold mining stocks was even more remarkable. The long slump in the sector was interrupted yesterday with a jump of around 3% in the biggest gold stocks. Gold prices added 0.5%, gaining support shortly after falling below $1750.
Gold's ability to resist the general downtrend speaks to investor confidence that global central bank policies will remain soft enough to avoid triggering a global downward asset sell-off spiral.
Of course, one should bear in mind the risks of volatility ahead of Wednesday's Fed meeting. The outcome of the meeting and comments have, in theory, the potential to break or reinforce any trend (both long term bullish and short term bearish). In practice, however, the FOMC comes with very streamlined wording that does not cause a strong adverse reaction.
The FxPro Analyst Team
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