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The precious metals market saw substantial gains during Friday morning’s U.S. trading session. Gold prices surged, trading at $2,691.76, an increase of $21.48. Silver also posted significant gains, trading at $30.47, up 36 cents.
The precious metals market saw substantial gains during Friday morning’s U.S. trading session. Gold prices surged, trading at $2,691.76, an increase of $21.48. Silver also posted significant gains, trading at $30.47, up 36 cents.
Despite the release of a stronger-than-expected U.S. economic report—which typically supports monetary policy tightening—gold and silver prices rose sharply. Analysts attribute this to increased safe-haven demand driven by heightened concerns in the bond market, with bond market vigilantes causing unease among investors.
Despite the release of a stronger-than-expected U.S. economic report—which typically supports monetary policy tightening—gold and silver prices rose sharply. Analysts attribute this to increased safe-haven demand driven by heightened concerns in the bond market, with bond market vigilantes causing unease among investors.
U.S. Employment Data Exceeds Expectations
The December U.S. employment report showed a striking increase in non-farm payrolls:
256,000 new jobs added, surpassing the expected 160,000.
Unemployment rate dipped to 4.1%, slightly lower than the anticipated 4.2%.
This robust data indicates that the U.S. labor market is not only recovering from its mid-year slowdown but is also gaining momentum. Such strong employment figures pose challenges for the Federal Reserve’s anticipated interest rate cuts, complicating their previously expected pivot in monetary policy.
Shifting Federal Reserve Expectations
Recent economic indicators have caused a dramatic shift in market expectations regarding the Federal Reserve’s monetary policy:
The probability of a "Fed pivot" to lower interest rates in the near term has diminished.
Market expectations now indicate a 44% chance of no rate cuts through June 2025.
Previously, markets anticipated five or more rate cuts in 2025. The changing outlook has driven the 10-year Treasury note yield toward 5%, reflecting the market’s adjustment to these evolving economic conditions.
The ongoing uncertainty in the bond market, combined with shifting Federal Reserve policies, has amplified the safe-haven appeal of precious metals like gold and silver. Investors are turning to these assets as they seek stability amidst economic volatility.
Summary:
The precious metals market is experiencing strong growth, driven by increased safe-haven demand amid unexpected U.S. employment data and a reassessment of Federal Reserve policy expectations. With market dynamics shifting, gold and silver continue to attract attention as resilient investment options in uncertain economic times.
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