The European Central Bank and Bank of England are also holding meetings this week. Gold ETFs have trended higher lately on speculation the Fed and other central banks may announce more quantitative easing measures. [Gold ETFs Turn Higher on ECB Pledge as Central Banks Meet]
“The FOMC rate announcement might shake things up Wednesday afternoon,” said WhatsTrading.com options strategist Frederic Ruffy in the Reuters story. The XLF spread trade “might be an opening position to hedge the risk of falling financials in the months ahead,” Ruffy said.
“Investing in the financials sector requires a strong risk tolerance and the understanding that the sector is in recovery mode and will be susceptible to setbacks if the economy falters,” Morningstar says in an analyst report on XLF. “Regulatory uncertainty and macroeconomic fears are unlikely to lift anytime soon.”
On Monday, put buyers resurfaced in XLF and “appear to be hedging positions in the sector ETF headed into this fall,” said Paul Weisbruch at Street One Financial in a note Tuesday.
Financial Select Sector SPDR
