THE RECENT strong performance by major US equity markets is in large part down to prolonged accommodative monetary policies from the Federal Reserve, according to one long-serving Wall Street economist.

David Rosenberg, chief economist and strategist at wealth management firm Gluskin Sheff and former chief North American economist at Bank of America Merrill Lynch, made a case this week for investors to buy gold and corporate bonds as part of their portfolio, expressing concern over how dependent stock prices are on Fed policy.

The Dow Jones Industrial Average saw its highest ever close Wednesday, while the S&P 500 closed at its highest level since October 2007.

"The reality is that even though the economy has not gained much traction four years into a soft recovery phase, the Fed has exerted a tremendous impact on the markets," Rosenberg said in a note earlier this week.

"The Fed's incursions have been so powerful that the bulls have Ben Bernanke to thank for nearly half the rally from the lows during this four-year cyclical run," he added.

"We remain quite defensive in posture and do not have tremendous conviction over the longevity of the most recent rally."

Although Rosenberg acknowledges holding stocks can offer investors a source of income, he adds that buying large companies that offer growing dividends is now a "crowded trade".

"I have much more confidence over the quality of corporate balance sheets right now and have little visibility, if truth be told, over the outlook for corporate earnings," he said, setting out a case for holding corporate bonds.

In a speech at the CFA Institute of Chicago conference on Tuesday meantime, Rosenberg added that investors should buy gold, repeating his call that gold will rise to $3000 an ounce.

Rosenberg's former employer BoA-Merrill Lynch is among a number of investment banks to have cut gold price forecasts recently, with the bank's chief gold analyst cutting the 2013 forecast by 7% to an average of $1680 an ounce and shaving 10% off the $2000 previously forecast for 2014.

Deutsche Bank and Morgan Stanley also expect to see the average gold price to rise between 2013 and 2014, in contrast with BNP Paribas, Citigroup, Credit Suisse, Goldman Sachs and Societe Generale, all of which have forecast a drop.

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