Fed Emergency Interest Rate Cut
The Federal Reserve cut the interest rate from 4.25% to 3.5% after a second day of miserable trading.
Stocks plunged in Asia for a second day, which led on into UK and US markets. The Fed made a 0.75% rate cut to help ward off the increasing signs of recession. “Policy makers weren’t scheduled to gather until next week. It’s the biggest single reduction since the Fed began using the rate as the principal tool of monetary policy around 1990.” - Bloomberg
Global Stock Markets Bearish
With tighter financial conditions, and speculation of a Fed rate cut, nearly 50% of the global stock indices were down yesterday.
Gold More Attractive
For many investors the considerable risk makes other investments more attractive. Gold being one of the main contenders. Gold rallied after the Fed announced the rate cut.
The spot gold price Gold in London rose to $874.65 a troy ounce, as the announcement signalled emergency tactics to bolster the US economy.
A Look At The Chart
The chart shows a sharp surge in the price of GDX Gold after the news release. Gold was in a down-trend, but still moving well above the 200-day sMa. The sharp rally takes GDX through the 55-day sMa with the RSI above 50 and pointing upwards. To late to pick-up anything now but worth watching were the RSI heads in coming days.
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Big news this lot of people posting about it. Read this on Financial Market earlier on