Gold is not a dream risk-off hedge, nor is Bitcoin [Video]

Ipek Ozkardeskaya ipekScope

The US government won’t be shut today, as Joe Biden signed a funding bill that should keep the US government agencies running until December 3rd. So, the short-term solution to the US debt ceiling issue should give a certain relief to US equity markets in the short-run, after the S&P 500 finally couldn’t hold on for longer and gave in the 100-dma resistance to close the session a touch above the 4300 mark.

But the picture is not optimistic. US futures are in the red as Asian equity markets kicked off the new month on quite a negative note. We saw Japan’s Nikkei index plunge more than 2.5% overnight, as Australian ASX200 slid close to 2% on rising inflation fears, which would keep the central banks’ hands tied faced with a slower economic recovery due to the skyrocketing energy and commodity prices.

In summary, the high inflation is about to become a worst headache than the pandemic itself, as at least for the pandemic, central banks had tools to use. With this high inflation, they have nothing to do.

And the traditional hedge for inflation and a market rout gold has not shouted present in September decline in equity markets, nor did Bitcoin.

Author

Ipek Ozkardeskaya

ipekScope

Ipek Ozkardeskaya began her financial career in 2010 in the structured products desk of the Swiss Banque Cantonale Vaudoise. She worked in HSBC Private Bank in Geneva in relation to high and ultra-high-net-worth clients.

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