Market Sentiment Remains Cautious
The leading trio of U.S. stock indices, including the Dow Jones Industrial Average, Nasdaq Composite, and the S&P 500, experienced a downturn on Wednesday afternoon. This decline coincided with a surge in 10-year Treasury yields, which jumped 0.98% to 4.102%. At the same time, the value of gold decreased by a percentage point, and bitcoin also witnessed a decline, dropping 1.02% in relation to the U.S. dollar.
Concerns Over Federal Reserve's Strategies
Market sentiment remains wary regarding the U.S. Federal Reserve's strategies for 2024, with anticipation growing around a potential rate cut by March. This outlook comes in the wake of remarks made by Federal Reserve Governor Christopher Waller during an address at the Brookings Institution in Washington. Waller acknowledged the possibility of a rate reduction occurring within the year but emphasized that the Fed is not in a hurry to initiate this change.
"I see no reason to move as quickly or cut as rapidly as in the past," Waller said.
Surge in Treasury Yields
In a predictable turn of events, 10-year Treasury yields saw a 0.98% increase on Wednesday, following a 4.4% rise over the past month. As of Jan. 17, 2024, the long-term note has reached a level of 4.106%. Simultaneously, the 2-year Treasury yields experienced a significant jump of 3.08%, although they remain 2.16% lower compared to the previous month's figures. Currently, the market is leaning towards a 97.4% likelihood that the U.S. central bank will opt for a rate hike in its upcoming meeting scheduled for Jan. 31, 2024.
Potential Rate Cut by March
The CME Fedwatch tool indicates a 52% probability that the central bank will reduce the federal funds rate by March 2024. Presently, an ounce of fine gold is valued at $2,006 per unit, experiencing a 1.09% decline in the last day. Over the past month, gold's value has dropped by 0.66%, but it has gained 1.86% in the last six months. On Jan. 17, bitcoin (BTC) witnessed a 1.02% fall, and over the past week, the leading crypto has declined by more than 7%. Nevertheless, six-month statistics reveal a 43% increase in BTC's value, surpassing gold's market performance during the same period.
Global Market Performance
Although bitcoin displayed a subdued performance on Wednesday, the global market capitalization of the crypto economy climbed by 0.49%, reaching $1.69 trillion. The Dow Jones Industrial Average experienced a modest decline of 0.25% on the same day, while the Nasdaq Composite recorded a decrease of 0.59% at market close. Additionally, the S&P 500 lost 0.56%, and the Russell 2000 (RUT) ended the day with a 0.73% drop. As usual, financial markets are experiencing a period of cautious sentiment, particularly in relation to the Fed's monetary policy direction for 2024.
What are your thoughts on the current state of markets? Share your opinions in the comments section below.
Frequently Asked Questions
What is the best precious-metal to invest?
The answer to this question depends on how much risk you are willing to take and what type of return you want. Gold has been traditionally considered a haven investment, but it's not always the most profitable choice. For example, if you need a quick profit, gold may not be for you. Silver is a better investment if you have patience and the time to do it.
If you don’t want to be rich fast, gold might be the right choice. If you want to invest in long-term, steady returns, silver is a better choice.
What is a Precious Metal IRA, and how can you get one?
A precious metal IRA allows for you to diversify your retirement savings in gold, silver, palladium and iridium. These metals are known as “precious” because they are rare and extremely valuable. These are excellent investments that will protect your wealth from inflation and economic instability.
Precious metals often refer to themselves as “bullion.” Bullion refers actually to the metal.
Bullion can be bought through many channels, including online retailers, large coins dealers, and some grocery shops.
With a precious metal IRA, you invest in bullion directly rather than purchasing shares of stock. You'll get dividends each year.
Precious metal IRAs do not require paperwork nor annual fees, unlike regular IRAs. Instead, you pay only a small percentage tax on your gains. Plus, you can access your funds whenever you like.
Is gold a good choice for an investment IRA?
Anyone who is looking to save money can make gold an excellent investment. You can diversify your portfolio with gold. But there is more to gold than meets the eye.
It's been used throughout history as a currency, and even today, it remains a popular form of payment. It is often called “the oldest currency in the world.”
Gold, unlike other paper currencies created by governments is mined directly from the earth. This makes it highly valuable as it is hard and rare to produce.
The supply and demand for gold determine the price of gold. The strength of the economy means people spend more, and so, there is less demand for gold. The value of gold rises as a consequence.
On the other hand, people will save cash when the economy slows and not spend it. This leads to more gold being produced which decreases its value.
This is why both individuals as well as businesses can benefit from investing in gold. You will benefit from economic growth if you invest in gold.
Also, your investments will earn you interest which can help increase your wealth. If gold's value falls, you don't have to lose any of your investments.
Are You Ready to Invest in Gold?
The answer depends on how much money you have saved and whether gold was an investment option available when you started saving. You can invest in both options if you aren't sure which option is best for you.
In addition to being a safe investment, gold also offers potential returns. It is a good choice for retirees.
While most investments offer fixed rates of return, gold tends to fluctuate. Therefore, its value is subject to change over time.
But this doesn't mean you shouldn't invest in gold. It is important to consider the fluctuations when planning your portfolio.
Another advantage of gold is its tangible nature. Gold is much easier to store than bonds and stocks. It can also be transported.
You can always access your gold if it is stored in a secure place. There are no storage charges for holding physical gold.
Investing in gold can help protect against inflation. As gold prices rise in tandem with other commodities it can be a good hedge against rising cost.
Additionally, it will be a benefit to have some of your savings invested into something that won't lose value. When the stock market drops, gold usually rises instead.
Another benefit to investing in gold? You can always sell it. You can easily liquidate your investment, just as with stocks. You don't even need to wait for your retirement.
If you do decide to invest in gold, make sure to diversify your holdings. Don't put all your eggs on one basket.
Also, don't buy too much at once. Begin by buying a few grams. Next, add more as required.
Keep in mind that the goal is not to quickly become wealthy. It's not to get rich quickly, but to accumulate enough wealth to no longer need Social Security benefits.
Gold may not be the most attractive investment, but it could be a great complement to any retirement strategy.
How much should precious metals be included in your portfolio?
To answer this question we need to first define precious metals. Precious metals have elements with an extremely high worth relative to other commodity. This makes them highly valuable for both investment and trading. The most traded precious metal is gold.
There are also many other precious metals such as platinum and silver. The price for gold is subject to fluctuations, but stays relatively stable in times of economic turmoil. It is also not affected by inflation and depression.
The general trend is for precious metals to increase in price with the overall market. But they don't always move in tandem with one another. If the economy is struggling, the gold price tends to rise, while the prices for other precious metals tends to fall. This is because investors expect lower interest rates, making bonds less attractive investments.
In contrast, when the economy is strong, the opposite effect occurs. Investors want safe assets such Treasury Bonds and are less inclined to demand precious metals. Since these are scarce, they become more expensive and decrease in value.
Therefore, to maximize profits from investing in precious metals, you must diversify across multiple precious metals. Additionally, since the prices of precious metals tend to rise and fall together, it's best to invest in several different types of precious metals rather than just focusing on one type.
Statistics
- Contribution limits$6,000 (49 and under) $7,000 (50 and up)$6,000 (49 and under) $7,000 (50 and up)$58,000 or 25% of your annual compensation (whichever is smaller) (lendedu.com)
- The price of gold jumped 131 percent from late 2007 to September 2011, when it hit a high of $1,921 an ounce, according to the World Gold Council. (aarp.org)
- You can only purchase gold bars at least 99.5% purity. (forbes.com)
- If you take distributions before hitting 59.5, you'll owe a 10% penalty on the amount withdrawn. (lendedu.com)
- (Basically, if your GDP grows by 2%, you need miners to dig 2% more gold out of the ground every year to keep prices steady.) (smartasset.com)
External Links
bbb.org
cftc.gov
wsj.com
- Saddam Hussein’s InvasionHelped Uncage a Bear In 1989 – WSJ
- Are you interested in keeping gold in your IRA at-home? It's Not Exactly Legal – WSJ
irs.gov
How To
Guidelines for Gold Roth IRA
It is best to start saving early for retirement. Start saving as soon and as often as you're eligible (usually around 50 years old) and keep going until retirement. To ensure sufficient growth, it is vital that you contribute enough each year.
You may also wish to take advantage of tax-free investments such as a SIMPLE IRA, SEP IRA, and traditional 401(k). These savings vehicles permit you to make contributions, but not pay any tax until your earnings are withdrawn. These savings vehicles are great for those who don't have access or can't get employer matching funds.
Savings should be done consistently and regularly over time. You may not be eligible for any tax benefits if your contribution is less than the maximum allowed.
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By: Jamie Redman
Title: Treasury Yields Surge, Dow, Nasdaq, and S&P 500 Tumble
Sourced From: news.bitcoin.com/us-stocks-bitcoin-and-gold-drop-as-fed-plays-coy-on-rates-investors-in-limbo/
Published Date: Thu, 18 Jan 2024 00:30:28 +0000
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