Gold Jumps to A Four Week High After December Jobs Report

U.S. stocks plunged and gold climbed to a four-week high after a blow-out December jobs report on January 10. The Dow sank nearly 700 points as investors fled the equity markets following news that the U.S. economy added 256,000 new jobs in December, far outpacing estimates of around 165,000 jobs.

Investors once again turned to the safety of gold as expectations the Federal Reserve will not reduce interest rates as much as previously expected took the wind out of the stock market’s sails.

Overall, investors dumped stocks amid concerns that the job market would add more inflation to the economy at a time when the Fed has failed to get prices under control. The December jobs report reinforced expectations that the central bank will keep interest rates unchanged when it meets next at the Jan. 28-20 meeting. The markets are pricing in a 94% chance that the Fed holds rates steady when it meets in late January, according to the CME Fedwatch Tool.

The unexpected strength in the jobs report spooked stocks on a couple of fronts and reveals how the equity market is on weak footing. Stock investors are worried both about inflation and that higher interest rates are here to stay for longer, which weighs on stocks.

Stock investors may want to prepare for increased stock volatility in the weeks and months ahead as the Fed has fewer reasons to cut interest rates this year.

Meanwhile, gold is flexing its strength and racing out of the starting gates in 2025 trading near $2,700 an ounce, following the precious metals’ stunning 26% gain last year. Gold settled at their highest level in four weeks in the week ending January 10, despite gains in the U.S. dollar and Treasury yields.

The great gold rally of 2024 is continuing at full speed ahead as worries about the U.S. fiscal situation continue to support inflows into safe-haven, tangible assets like precious metals. With the U.S. debt levels climbing to $36.3 trillion and as a percentage of our gross domestic product is nearly 125%. Worries about the rising debt and the potential for a debt crisis are resulting in higher Treasury yields as bond investors demand higher returns relative to the risk that government bonds represent.

In today’s uncertain world, gold continues to tower among other asset classes in terms of safety and security. Gold ownership provides peace of mind as it allows you to preserve, protect and grow your wealth just it has for the past 5,000 years.

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