The Merriam-Webster dictionary defines sentiment as, “an attitude, idea, or judgment motivated by emotion: prejudice.: a specific attitude or perception: opinion.: feeling. refined feeling: delicate sensibility especially expressed in a work of art.” Done.: Emotional idealism.
As it pertains to the financial markets, market sentiment is the thought or attitude that forms our opinion of whether an asset class is over or undervalued. It shapes and changes the value of the stock or commodity price.
Market sentiment is highly sensitive to statements and comments made by Federal Reserve officials because those individuals have the power and influence to change monetary policy.
There is a dramatic difference between the perception of the Federal Reserve’s upcoming monetary policy changes and the actions of Federal Reserve officials.
The Federal Reserve raised rates at every FOMC meeting except January this year, from March to November, for a total of six rate hikes. In the last four FOMC meetings (June, July, September and November), they raised rates by 75 basis points.
The aggressive nature of the Federal Reserve’s monetary policy caused gold to decline dramatically from March to early November. Traded gold…
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