According to the latest survey conducted with Bloomberg News readers, the S&P 500 is considered overvalued compared to US credit or gold. As much as 52% of respondents believe that the S&P 500 is overpriced compared to gold and US credit.
Furthermore, 49% of respondents predict that the next 10% correction in the S&P 500 will begin sometime in 2024. Similarly, 55% expect to maintain their S&P 500 investments in the next month.
31% indicated that the main factor behind the anticipated correction is negative surprises on the AI front, followed by an increase in unemployment rates (27%) and rising inflation (24%), which would force the Federal Reserve to keep interest rates higher for longer.
High interest rates are a negative signal for the metals market as they increase the opportunity cost of investing in non-yielding assets.
This week’s focus is on the PCE price index data, the Federal Reserve’s preferred inflation measure. This data will be released on Friday and is widely expected to show a slight decrease in inflation but still much higher than the central bank’s annual target of 2%.
On the other hand, the surveyed investors picked value stocks as the biggest bargain in the US stock market, followed by small stocks and the equal-weight S&P 500.
Goldman Sachs has similarly increased its S&P 500 price target to 5,600, thanks to strong earnings growth from key technology companies including Nvidia, Amazon, Microsoft, Google, and Meta Platforms, which together account for a quarter of the index’s market capitalization.
Nevertheless, the metals market in general and gold in particular, remain a valuable investment portfolio. Rarely exhibiting explosive growth, gold will always increase in the long term. Unlike other highly volatile investment portfolios, gold carries very little risk when you have the right knowledge and invest at the right time.
