Market Snapshot – Gold, Global Stocks Soar on Dovish Fed and Dutch Election Results

Gold and Silver Rally after Dovish Fed Hike

Gold prices shot through the roof yesterday and today following the disappointing statement from the Fed which failed to give any specific timeline for the next hike.

The Fed’s announcement was interpreted as being bearish for the dollar which was sold across the board. In reaction, investors seek safe havens assets and transfer their funds into precious metals.

Gold is trading at 1231.25, 2.61% up, Silver is also on a bullish sentiment to trade at 17.492, +3.40%.

Markets Boosted by Dutch Election Results

The EUR hit an intraday high of $1.0746 as market relief over an Establishment victory in the Netherlands giving the EUR a bounce ahead of the European open.

Exit polls showed a Rutte victory, with more than 80% of voters turning out. Rutte’s party is estimated to have taken 33 seats, a loss of 8 from 2012, with Wilders coming in second with approximately 20 seats. While Rutte’s victory had been correctly forecasted by the polls, the biggest surprise may have been the demise of the Social Democrat PvdA party.

A populist victory was expected to weigh heavily on the EUR, but the Eurozone looks safe for now, Draghi seemingly justified over his lack of concern over the rise of populist governments, the Dutch elections having been described as a barometer of populist government support across the region.

Bank of England Keeps Rates and Policy Unchanged

The Bank of England left the repo rate unchanged at 0.25% and quantitative easing was also left unchanged, as widely expected. The British central also said to maintain its stimulus program with a monthly asset purchase of £435B.

The Pound is trading higher versus US Dollar at 1.2360, +0.55 after the pair hit a low of 1.2107 on Tuesday.

The SNB and BoJ also kept their rates and policy on hold. The Bank of Japan left policy unchanged and pledge substantial QE along with their yield curve policy. The Swiss National Bank left its policy rate at 0.5%, as was widely anticipated. In its statement, the central bank said that it expects inflation to fall faster than previously forecast, but also stressed that inflation may increase in the future.

Global Stocks Rally on Dovish Fed and Dutch Election Results

European stock markets rallied, led by Eurozone peripherals as Euro-breakup fears recede in the wake of the Dutch election outcome and amid a wider rise in global markets after the Fed lifted interest rates but maintained a cautious stance on further policy moves.

Asian markets closed broadly higher, with the Hang Seng leading the way and jumping more than 2%. The Nikkei underperformed with a 0.7% gain as the Yen strengthened and the BoJ kept policy on hold.