Hello, my friends!

Perhaps the biggest economic story of this week was the widely anticipated decision by the Federal Reserve to leave interest rates untouched at the conclusion of its first two-day policy meeting in 2026.

On Wednesday, the Federal Open Market Committee (FOMC)…the central bank’s policymaking arm…voted by a margin of 10-2 to keep the benchmark federal funds rate at the target range of 3.5% to 3.75%. Governors Stephen Miran and Christopher Waller – both Trump appointees – were the dissenters, with each advocating for another quarter-point cut.

Most of the committee members felt that a pause was in order this month, however, believing that concerns about persistent inflation now outweigh worries about possible weakness in the labor market. It was the first time in four meetings the FOMC decided to stand fast on rates.

“Available indicators suggest that economic activity has been expanding at a solid pace. Job gains have remained low, and the unemployment rate has shown some signs of stabilization,” the post-meeting statement explained. “Inflation remains somewhat elevated.”

Notably, neither the statement nor any comments made by Fed Chair Jerome Powell at his summary press conference seemed to shed any light on what the committee has in mind for monetary policy going forward. For their part, traders don’t expect to see another rate reduction before June and currently project just two rate cuts, in total, between now and the end of 2026.

Aircraft Orders Spark Big Rebound in November Durable Goods Number

Elsewhere this week, the Census Bureau reported on Monday that orders for durable goods made a sharp turnaround in November, jumping 5.3% after sinking 2.1% in October. The November number is considerably better than the 3% rise projected by economists and the best result of the past six months.

The big improvement was sparked by a whopping 98% increase for the month in civilian aircraft orders, with transportation orders, overall, rising by nearly 15%.

Notably, durable goods orders climbed in November even without the tailwind provided by the general transportation and aircraft sectors. Core durable goods, which strip out the often-volatile transportation sector to get a clearer look at underlying business activity, rose 0.5% after increasing 0.1% in October. And as for non-defense capital goods ex-aircraft, those increased 0.7%.  

Some observers attribute the robust numbers to diminishing concern about tariff impacts, with Stephen Stanley, chief U.S. economist at Santander U.S. Capital Markets, suggesting:

“While uncertainty is far from eliminated, executives appear to have reached the point where they have enough information to move forward.”

Business Activity in Texas Sees Improvement This Month

Also on Monday, the Federal Reserve Bank of Dallas announced that the index derived from its Texas Manufacturing Outlook Survey jumped 10 points in January, suggesting business activity is on the upswing in the Lone Star state.

According to the Dallas Fed, the survey’s index for general business activity soared to -1.2 this month from -11.3 in December. And while readings even slightly below zero still technically imply contraction in the manufacturing sector, several key component measures surged into expansion territory in January, raising the possibility that a move there by the overall index may be just around the corner.

The Production Index, for example, jumped to 11.2 this month from -3.0 while the New Orders Index climbed to 11.8 from its December reading of -6.6. Also, the Capacity Utilization Index rose to 7.1 after coming in at -4.6 last month. The Shipments Index rebounded especially sharply, leaping to 12.0 after measuring -10.5 in December.

As for the comments from survey respondents, some of the most upbeat came from machinery manufacturers, with one gushing:

“Business is booming and for that we are pleased. We are buying new equipment to increase production, since we are falling behind on our inventory requirements, and sales have increased significantly.”

Key Consumer Sentiment Metric Falls for Sixth Month in a Row

Finally, The Conference Board reported on Tuesday that its widely followed Consumer Confidence Index declined for the sixth straight month in January, tumbling an eye-opening 9.7 points to land at 84.5. Heading into the week, economists expected to see the index come in at a more buoyant reading of 90.

Of particular note – and concern, perhaps – is that January’s number is the lowest in more than 11 years…which means, of course, it’s now lower than any of the levels seen at any time during the pandemic.

Unsurprisingly, the overall index’s two principal component metrics, the Present Situation Index and Expectations Index, each fell precipitously this month. The Present Situations Index tanked 9.9 points to land at 113.7 and the Expectations Index, which gauges consumers’ outlook for the economy six months down the road, fell 9.5 points to 65.1. Notably, January marks the 12^th consecutive month the Expectations Index has come in below 80, territory the board says signals forthcoming recession.

That’s all for now; have a wonderful weekend!

This post is created and published for general information purposes only. The Gold Strategist blog disclaims responsibility for any liability or loss incurred as a consequence of the use or application, either directly or indirectly, of any information presented herein. Nothing contained in this post – or any other post featured at this blog – should be construed as a solicitation or recommendation to engage in any financial transaction. You should seek the advice of a qualified professional before making any changes to your personal financial profile.

Hello, my friends!

In what surely is a surprise to no one, it was President Trump’s rather controversial appearance at the annual World Economic Forum in Davos, Switzerland that proved to be the most notable bit of economic…or economic-related, at least…news to emerge this week.

Although much of this year’s gathering was devoted to the future of artificial intelligence (AI) on the global stage, Trump’s special address on Wednesday was focused largely on geopolitics. Among the president’s most prominent talking points included crowing about the U.S.’s perceived importance in ensuring global geopolitical and economic security as well as – relatedly – his bid to acquire Greenland.

“I think there were two Davoses,” said former Democratic Congresswoman Jane Harman. “One of them was very senior industrial leaders talking about AI. … The second was foreign policy, or geopolitics, and that was dominated by one person.”

President Trump’s speech was loaded with the usual hip shots, including swipes at various U.S. and world leaders, but by the time he left Switzerland, the global stage looked largely as it did when he arrived 24 hours earlier. No harm, no foul, as the saying goes.

To the extent there were any notable developments during his appearance in Davos, the president backed down from earlier threats to impose tariffs on nations opposed to U.S. acquisition of Greenland and also reassured attendees that he would not use force to obtain the Danish territory…revised positions that inspired confidence in financial markets and push major indexes back toward record levels. On his Truth Social platform, Trump implied that his acquiescence on Greenland was a result of reaching the “framework of a future deal” on Arctic security with Nato Secretary General Mark Rutte, but details on that agreement were not forthcoming.  

Highly Regarded Inflation Metric Indicates Price Pressures Intensified in November

As for the week’s most notable data release, the Commerce Department reported on Thursday that the November personal consumption expenditures price index (PCE)…known to be the Fed’s preferred inflation measure…increased at a monthly rate of 0.2% and at a year-over-year pace of 2.8%.

Core PCE, which excludes more volatile food and energy prices, also rose in November at monthly and annual rates of 0.2% and 2.8%, respectively.

Along with the data for November, the government’s report included the PCE figures for the prior month, which had been delayed by the government shutdown. Those numbers showed the October PCE index – both headline and core – rose 0.2% on the month and 2.7% year over year.

Notably, annual core PCE has remained stuck between 2.5% and 3.0% for about the last two years. And for its part, annual headline PCE has steadily accelerated since slowing to 2.2% last April. Both trends highlight the profound “stickiness” of price pressures as official inflation rates struggle to return to the Federal Reserve’s 2% price target.

They also highlight the uncertainty hovering over monetary policy right now. Although the labor market unquestionably has cooled some over the last several months, consumer spending has remained exceptionally resilient. Now with inflation continuing to dig in its heels near 3%, it’s difficult to know when we’ll see another rate cut. As things stand, traders overwhelmingly say it’s unlikely the central bank will cut interest rates again before June.

Key Metric Suggests U.S. Business Growth May Be Slowing

Also this week, S&P Global reported on Friday that its Flash U.S. Composite Purchasing Managers’ Index (PMI) ticked up slightly in January, rising to 52.8 from December’s 52.7. Index measures above 50 imply expansion of the economy.

Although a net improvement, the January number is a bit underwhelming considering that the reading for December represented an eight-month low for the index.

“Flash” PMIs are advance estimates of the final numbers that come out at the end of each month and are calculated using roughly 85% to 90% of the survey responses.

Unsurprisingly, there also was little-to-no change in the broader index’s principal component measures. Flash U.S. Manufacturing PMI rose 0.1 percentage point to 51.9, while the Flash U.S. Services PMI needle didn’t budge from December, again landing at 52.5.

President Trump’s aggressive tariff policies were again cited as a principal source of the ongoing challenges to the overall business environment, with higher rates of input cost and selling price inflation directly attributed to the duties.

In a statement, Chris Williamson, chief business economist at S&P Global Market Intelligence, said, “The flash PMI brought news of sustained economic growth at the start of the year, but there are further signs that the rate of expansion has cooled over the turn of the new year compared to the hotter pace indicated back in the fall.”

Williamson added that “the survey is signaling annualized GDP growth of 1.5% for both December and January, and a worryingly subdued rate of new business growth across both manufacturing and services adds further to signs that first quarter growth could disappoint.”

Pending Home Sales Sank More than 9% in December

Finally, the National Association of Realtors announced on Wednesday that pending home sales tumbled 9.3% month over month in December, a stark reminder that the housing market remains fraught with challenges.

“The housing sector is not out of the woods yet,” said Lawrence Yun, chief economist for the Realtors. “After several months of encouraging signs in pending contracts and closed sales, the December new contract figures have dampened the short-term outlook.”

Sales were down on an annual basis, as well, dropping 3% from December 2024.

Along with monthly sales, inventory also was down 9%. Just 1.18 million homes were on the market last month, matching the lowest level of inventory of 2025. Yun suggests that the relative lack of choices in December may have played a hand in the sales decline.

“Consumers prefer seeing abundant inventory before making the major decision of purchasing a home,” Yun said. “So, the decline in pending home sales could be a result of dampened consumer enthusiasm about buying a home when there are so few options listed for sale.”

Still, a drop in inventory is just one of the obstacles currently facing homebuyers. Mortgage rates remain roughly double where they were four years ago, home prices are about 50% higher from where they were five years ago, and recent measures of consumer sentiment have revealed little confidence in the near-term strength of the economy.

That’s all for now; have a wonderful weekend!

This post is created and published for general information purposes only. The Gold Strategist blog disclaims responsibility for any liability or loss incurred as a consequence of the use or application, either directly or indirectly, of any information presented herein. Nothing contained in this post – or any other post featured at this blog – should be construed as a solicitation or recommendation to engage in any financial transaction. You should seek the advice of a qualified professional before making any changes to your personal financial profile.

Hello, my friends!

In the week’s most anticipated economic data release, the Labor Department announced on Tuesday that the annual consumer price index (CPI), the nation’s most highest-profile inflation measure, landed at 2.7% on an annual basis in December. That’s neither faster nor slower than where it was in November, reminding us that while the worst price pressures may be squarely in our rearview mirror, realizing a return to the Federal Reserve’s 2% target level remains an ongoing challenge.

For the month, headline CPI rose 0.3% in December, a tenth of a point faster than November.

As for core CPI, which excludes more volatile food and energy prices, that climbed 0.2% for the month and 2.6% year over year in December. Both rates were unchanged from November.

Housing inflation remains a significant obstacle on the journey back to 2%. The shelter index, which makes up fully one-third of CPI, rose 0.4% last month and was up 3.2% year over year.  

Commenting on the inflation report just after its release, Ellen Zentner, chief economic strategist at Morgan Stanley Wealth Management, wrote:

“We’ve seen this movie before — inflation isn’t reheating, but it remains above target. There’s still only modest pass-through from tariffs, but housing affordability isn’t thawing. Today’s inflation report doesn’t give the Fed what it needs to cut interest rates later this month.”

Indeed, traders currently say there’s a 95% chance that Fed policymakers will keep the benchmark fed funds rate at the present level of 3.5% to 3.75% when they meet in the last week of January.

Retail Sales Rebounded in November

Also this week, the Commerce Department reported on Wednesday that retail sales jumped 0.6% in November, a sharp turnaround from October’s 0.1% decline and more proof of just how resilient the economy is despite pervasive uncertainty that includes ongoing tariff drama, deterioration in the labor market and persistent inflation.

The categories exhibiting the greatest sales strength were specialty shops (+1.9%), gas stations (+1.4%) and home improvement stores (+1.3%) while only two categories saw sales decline in November: furniture stores (-0.1%) and department stores (-2.9%).

Underscoring the “foundational” strength of consumer activity was the performance of the control group, a measure of retail sales that excludes select volatile categories including automobiles, gasoline, building materials and food services. The control group climbed 0.4% in November, which was far better than the 0.1% decline that economists expected to see.

The data for November, which had been delayed because of the government shutdown, makes clear that Americans are continuing to spend despite numerous economic headwinds. That bodes well for GDP (gross domestic product), which derives nearly 70% of its fuel from consumer spending.

What’s more, with tax refunds projected to be larger than normal this year, economists expect cash registers to continue ringing for some time to come.

 “Early 2026 should remain robust as many households receive tax refunds that are $500 to $1,000 bigger than normal, giving that extra cash cushion for some purchases or to pay off credit card debt,” Heather Long, chief economist at Navy Federal Credit Union, said on Wednesday.

Small Business Owners Gain Confidence Heading Into 2026

In other news this week, a new report suggests America’s small business owners are entering 2026 feeling more positive than they have in months about the prospects for the nation’s economy.

On Tuesday, the National Federation of Independent Business (NFIB) reported that its closely watched Small Business Optimism Index ticked up by half a percentage point last month to land at 99.5, in line with economists’ projections and the metric’s highest level since August.

Notably, a key component measure, the Uncertainty Index, fell seven points last month to 84 to its lowest level in the last year and a half.

While remaining solidly below the 105.1 reached in December 2024 amid a surge in post-election confidence, the index has managed to stay resilient through business owner concerns about the potential impacts of President Trump’s dynamic tariff policy. In fact, since Trump’s reelection in November 2024, the index has dipped below its long-term average of 98 just two times, with December’s reading marking the 8^th consecutive month the metric has landed above that figure.   

In a summary statement on the data, NFIB chief economist Bill Dunkelberg said, in part:

“While Main Street business owners remain concerned about taxes, they anticipate favorable economic conditions in 2026 due to waning cost pressures, easing labor challenges, and an increase in capital investments.”

Wealthiest Americans Largely Supporting Economy, Fed Survey Finds

Finally, the Federal Reserve on Wednesday published the first of its eight Beige Books for 2026, which revealed that while economic activity across the country saw a slight uptick recently, much of that was attributable to spending by the wealthiest Americans.

Fed Beige Books…so named because of the color of their covers…contain more qualitative information about the condition of the economy across the central bank’s 12 districts. The information is gathered from interviews with business contacts and other key observers in each district, and published two weeks before each meeting of the policy-making Federal Open Market Committee.

The latest edition noted that economic activity recently increased at a “slight to modest pace,” adding:

“This marks an improvement over the last three report cycles where a majority of Districts reported little change.”

However, the summary also reflected persistent concerns that it’s the nation’s best-heeled citizens who are doing the thriving, while low- and middle-income Americans remain mired in uncertainty and instability.

“Several Districts also noted that spending was stronger among higher-income consumers with increased spending on luxury goods, travel, tourism, and experiential activities,” the report said. “Meanwhile, low to moderate income consumers were seen to be increasingly price sensitive and hesitant to spend on nonessential goods and services.”

The report also suggested that long-feared tariff-driven price increases which have failed to materialize are still a threat. Now that many industries have finally worked through much of the inventory they stockpiled prior to the imposition of tariffs, some companies are saying they expect to pass along higher goods costs to consumers in the coming months. The Boston Fed, for example, indicated that firms in its district are planning “selective price increases for the coming months, ranging from low single digits for pharmaceuticals to 5 to 10% for certain consumer products.”

That’s all for now; have a wonderful weekend!

This post is created and published for general information purposes only. The Gold Strategist blog disclaims responsibility for any liability or loss incurred as a consequence of the use or application, either directly or indirectly, of any information presented herein. Nothing contained in this post – or any other post featured at this blog – should be construed as a solicitation or recommendation to engage in any financial transaction. You should seek the advice of a qualified professional before making any changes to your personal financial profile.

Some of you may recall that precious metals’ first reaction to the historic reelection of Donald Trump was to sink like a stone. It wasn’t a surprise, really; whenever businesses and investors feel particularly optimistic about the prospects for economies and markets, risk-off assets such as metals tend to suffer.

I, for one, didn’t see that backslide lasting long. My reasoning was simple: The world already was fraught with uncertainty…and once the election dust settled, Donald Trump, for all we know about him, likely wasn’t going to make it any less uncertain during his second go-round as president.

Gold Up 70% Since U.S. Presidential Election

Other observers felt much the same way. Following gold’s post-election drop. Ian Salisbury of Barron’s suggested that “gold prices’ slide in response to election results could be a head fake,” reasoning:

“From inflation to geopolitical uncertainty, the prospect of a second Donald Trump presidency only makes the investment case look stronger.”

Sure enough, metals regrouped in the weeks following the election and have kept surging. Gold did tumble 8% from the days leading up to the presidential election through the second week of November 2024. But from that point through today…a period that has seen the S&P 500 rise a little more than 20%…gold is up nearly 70% and is closing on $5,000 per ounce.

Now it seems that the broad climate of gold-favorable global economic uncertainty exacerbated by the mercurial Trump is poised to pay yet another dividend to the yellow metal. Recently, the Department of Justice (DOJ) suggested it may indict Federal Reserve Chair Jerome Powell in connection with testimony he gave before Congress about cost overruns associated with the ongoing renovations of the central bank’s headquarters. However, many, including the Fed chair himself, see this effort by the DOJ as being merely a pretext for intimidating Powell and the Fed into lowering interest rates on behalf of the president.

Attacks on Fed “a Key Bullish Wildcard” for Metals

With this latest and most direct attack (so far) on the Fed, concerns about the central bank’s independence during the second Trump administration are at their most pronounced. And given the implications of not only the emergence of another uncertainty “driver” but one with the potential to directly undermine confidence in the Federal Reserve, it makes all the sense in the world why faith in gold remains so high.

“We see increased interference with the Fed as a key bullish wildcard for precious metals in 2026,” Carsten Menke of global wealth manager Julius Baer Group Ltd. said recently.

Indeed, the possibility of an indictment against the chairman of the world’s most influential central bank underscores the importance of including not only safe-haven assets among one’s portfolio assets, but safe-haven assets which remain immune from the impacts of a diminishment in American exceptionalism.

More broadly, notes Saxo Markets chief investment strategist Charu Chanana, the possible indictment serves as “a reminder of how many uncertainties markets are juggling — geopolitics, the growth/rates debate, and now a fresh headline-driven reminder of an institutional risk premium.”

And a reminder, as well, of why the most politically and industrially neutral safe-haven asset available remains on track to keep climbing into the furthest outreaches of record territory.This post is created and published for general information purposes only. The Gold Strategist blog disclaims responsibility for any liability or loss incurred as a consequence of the use or application, either directly or indirectly, of any information presented herein. Nothing contained in this post – or any other post featured at this blog – should be construed as a solicitation or recommendation to engage in any financial transaction. You should seek the advice of a qualified professional before making any changes to your personal financial profile.

Hello, my friends!

Unsurprisingly, the holiday-shortened week provided us with less economic news than usual, but the updates we did receive were still plenty relevant.

In terms of data, perhaps the biggest story of the week was the Commerce Department’s announcement on Tuesday that gross domestic product (GDP) surged by a much larger-than-expected 4.3% annualized rate in the third quarter. Economists polled by Dow Jones had expected the government’s initial estimate of economic growth last quarter to come in at a less robust 3.2%. In the second quarter, GDP grew by 3.8%.

While increases in exports and government spending helped boost third quarter activity, it was a big jump in consumer spending that accounted for most of the improvement. Roughly 70% of GDP is attributable to spending by consumers, and that spending surged by 3.5% in Q3 after climbing 2.5% in Q2.

Notably, this most recent quarterly GDP reading is the highest in two years. But it’s also the first post-shutdown GDP report and that fact, combined with inflation’s continued persistence as well as signs of weakening consumer confidence (more on that shortly), has some wondering if the economy is really as strong as last quarter’s figure suggests.

“We don’t know if everything is as good as the third-quarter number suggests,” said Barclays economist Jonathan Millar, “but it is sending the message that the economy is hanging in there.”

The Commerce Department’s second estimate of Q3 GDP is scheduled for release on January 22.

Volatile Transportation Sector Weighs on October Durable Goods Orders

Elsewhere this week, the Census Bureau reported on Tuesday that orders for durable goods fell in October by a larger-than-expected 2.2% in October after rising 0.7% in September and 3% in August. Economists did expect orders to decline in October, but by a more modest 1.5%.

However, a closer look at the data points to the possibility that underlying business activity in October was stronger than the headline durable goods number suggests. Excluding the volatility-prone transportation sector, which dropped 6.5% in October on a collapse in orders for both civilian and military aircraft, durable goods orders actually rose 0.2%.

As for the positive activity, much of it was attributable to improvements in computers and electronic products (+1.0%), machinery (+0.8%) and fabricated metal products (+0.5%), while electrical equipment and primary metals saw orders decline by 1.5% and 0.7%, respectively.

Some additional good news from the October report was found in the growth number for core shipments (excludes transportation), which climbed another 0.7% after rising 1.2% in September. Core shipments are seen as a direct reflection of business investment and manufacturing health and serve as a critical input for the calculation of GDP.       

Worried Americans Drag Down Consumer Sentiment Number for Fifth Straight Month

On Tuesday, The Conference Board reported that its widely followed Consumer Confidence Index declined for the fifth straight month in December, sinking nearly four points from November’s reading to land at 89.1. Heading into the week, economists were expecting the index come in at a more resilient 91.7.

“Despite an upward revision in November related to the end of the shutdown, consumer confidence fell again in December and remained well below this year’s January peak,” said Dana M. Peterson, chief economist at The Conference Board.

The Expectations Index…a component metric that gauges consumers’ outlook for the economy six months down the road…stayed relatively steady this month. Notably, however, its reading of 70.7 means this closely watched component metric now has come in below the key threshold of 80 for 11 consecutive months. That’s significant because, according to the board, Expectations Index numbers below 80 signal forthcoming recession.

“Consumers’ write-in responses on factors affecting the economy continued to be led by references to prices and inflation, tariffs and trade, and politics,” Peterson noted. “However, December saw increases in mentions of immigration, war, and topics related to personal finances—including interest rates, taxes and income, banks, and insurance.”

This month’s index reading is one reason some analysts are suspicious of just how comprehensive the economic robustness conveyed by the Q3 GDP figure really is. For his part, ING chief international economist James Knightley declared this week that economic growth remains “concentrated among higher-income households and tech-led investment, while broader consumer confidence remains under pressure.”

Factory Activity Continues to Flounder in Mid-Atlantic Region

Finally this week, a key regional measure of U.S. manufacturing activity showed some improvement this month even as it remained squarely in contraction territory…suggesting that while conditions may be getting better, they have a ways to go before actually looking good.

On Tuesday, the Federal Reserve Bank of Richmond reported that the composite index generated by the results of its Fifth District Survey of Manufacturing Activity increased to a reading of -7 from -15 in November. The the survey assesses factory activity in the Fifth Federal Reserve District, which encompasses the District of Columbia, Maryland, North Carolina, South Carolina, Virginia and most of West Virginia.

Like the overall index, each of the measure’s component indexes improved this month but not enough to lift any of them into positive, or expansion, territory. The shipments index increased a few points to -11 from -14, new orders surged 14 points to -8 from -22, and the employment index increased to -1 from -7.

That’s all for now; have a wonderful weekend!This post is created and published for general information purposes only. The Gold Strategist blog disclaims responsibility for any liability or loss incurred as a consequence of the use or application, either directly or indirectly, of any information presented herein. Nothing contained in this post – or any other post featured at this blog – should be construed as a solicitation or recommendation to engage in any financial transaction. You should seek the advice of a qualified professional before making any changes to your personal financial profile.

Ed Yardeni, the man in charge at esteemed global investment strategy firm Yardeni Research, isn’t surprised to see that gold topped $4,000 by the end of 2025. Indeed, he expected to see it happen, noting early last year that the many drivers of gold’s ongoing surge, to include “inflation, political uncertainty and global chaos,” remain as dynamic as ever.

At the time, Yardeni said that beyond his expectation of $4,000 gold in 2025, he also projected the yellow metal would reach $5,000 by the end of 2026.

Now, however, the Yale-educated PhD economist is changing his tune. Not because he thinks gold is running out of gas and poised to change direction; rather, because even for as far and as fast as it’s risen so far, he thinks gold will finish much higher than $5,000 by next December.

“When the price of an ounce of gold rose above $3,000 at the start of this year, we projected it would reach $4,000 by the end of this year and $5,000 by the end of next year,” Yardeni recently told clients in a note.

“This evening, the price rose above $4,500. We are raising our year-end 2026 target to $6,000,” Yardeni added.

Yardeni’s Gold Projection Sits Head and Shoulders Above the Others

$6,000 in the next 12 months may seem excessively optimistic, particularly in the context of other projections made by credible observers. For example, Goldman Sachs said it’s now expecting to see gold finish 2026 at $4,900, while J.P. Morgan projects gold to rise to slightly above $5,000 over the same period. Other high-profile institutions such as UBS are also looking for gold to close out 2026 at around $5,000.

But if there was ever a time to be “excessively optimistic” about gold’s prospects, this seems to be it. Longstanding drivers of this extended rally such as central bank demand, heightened geopolitical risk and persistently higher inflation remain very much intact. Moreover, evidence suggests that gold remains significantly underinvested among retail investors, raising the possibility – even the expectation – that a significant rotation into the metal by the broader investment community is looming.

“Excessively Stimulative Monetary and Fiscal Policies” Helping to Sustain Gold’s Seemingly Neverending Surge

Additionally, says Yardeni, these and other gold-favorable factors persist against the backdrop of what may be among the metal’s most potent overall energy sources: the federal government’s seemingly single-minded drive toward outright fiscal unsustainability, now helped along by the central bank’s revitalized accommodative monetary policy posture.

“We suspect that the precious metals prices might be signaling recent concerns about an excessively stimulative combination of monetary and fiscal policies in the U.S. next year,” Yardeni said.

“Even if the Fed stops cutting the federal-funds rate during the first four months of 2026, the Fed is committed to buying about $40 billion per month in Treasury bills through April,” the economist added, referring to a recent operating policy statement issued by the Federal Reserve Bank of New York.

Could gold prices really be headed for $6,000 over the next 12 months? We certainly can’t know for sure right now. But given that each of the drivers that has pushed gold nearly 150% higher over the last three years remains in optimal condition and a potential new driver – broad-based investor demand – looms particularly large right now, the idea that gold could climb another 30% from present levels by next December doesn’t seem at all far-fetched.

This post is created and published for general information purposes only. The Gold Strategist blog disclaims responsibility for any liability or loss incurred as a consequence of the use or application, either directly or indirectly, of any information presented herein. Nothing contained in this post – or any other post featured at this blog – should be construed as a solicitation or recommendation to engage in any financial transaction. You should seek the advice of a qualified professional before making any changes to your personal financial profile.

Hello, my friends!

On Tuesday, the government reported that nonfarm payrolls grew by 64,000 in November, a relatively muted number but one hailed as something of a rebound given that the economy shed 105,000 jobs in October. The Labor Department released both of the delayed figures on Tuesday as statisticians and data scientists continue the effort of getting back to normal following the record 43-day government shutdown.

As for the official unemployment rate, that rose to 4.6% in November, its highest level in more than four years. Another less-referenced unemployment measure that accounts for discouraged workers as well as those working part time because they can’t find full-time jobs surged to 8.7%…its highest level in over four years, as well.

The sharp decline in October jobs was expected as deferred government layoffs took effect. In fact, government payrolls plummeted by 162,000 in October, which was followed by the loss of another 6,000 jobs last month.

And while shutdown-related data disruptions have made less reliable the government’s most recent economic numbers, there seems to be enough evidence to conclude that the nation’s labor market does, in fact, remain in a considerably weakened state.

“The U.S. economy is in a jobs recession,” said Heather Long, chief economist at Navy Federal Credit Union. “The nation has added a mere 100,000 in the past six months. The bulk of those jobs were in healthcare, an industry that is almost always hiring due to America’s aging population.”  

Shutdown-Delayed Inflation Report Shows Sizable Drop in Price Pressures Last Month

The week’s other big news included the long-awaited return of the consumer price index…another key economic barometer that’s been on hiatus thanks to the shutdown.

On Thursday, the Labor Department reported that the nation’s most popular inflation measure rose less than expected all the way around in November. Monthly CPI climbed 0.2% instead of the 0.3% widely projected by economists, while annual CPI rose 2.7%…considerably less than the consensus expectation of 3.1%.

Core CPI, which excludes frequently volatile food and energy prices, also pleasantly surprised, rising 0.2% on the month and 2.6% year over year. Economists were looking for the monthly and annual core numbers to come in at a faster 0.3% and 3%, respectively.

However, while investors seemed inspired enough by the data to send markets sharply higher that day (the Nasdaq Composite closed up nearly 1.5%), the same economists who were expecting to see greater price pressures last month were quick to caution that all might not be as it appears in the November report.  

A big part of the reason is that because the shutdown-hampered Bureau of Labor Statistics was unable to piece together a CPI report for October, there was no prior-month data to which to compare the November activity. As for the September report, that had headline CPI landing at 3.0%, and numerous analysts say they’re having a hard time believing price pressures relented as much in October as the November report seems to suggest.

“It’s hard to read too much into the November inflation data,” Heather Long, chief economist at Navy Federal Credit Union, wrote. “The shutdown clearly had a big impact on data collection. Inflation did not suddenly improve a lot between September and November. Anyone who has been to the grocery store or paid a utility bill knows this.”

In fact, some say, investors should prepare for the likelihood that December’s inflation report will reflect reaccelerating price increases.

“We believe the data will be noisy for at least another month or two,” economists Sarah House, Michael Pugliese and Nicole Cervi wrote on Thursday. “A bounce back in prices in the December CPI report to be released on January 13 is probably coming.”

Key Metric Indicates U.S. Business Growth Reached Six-Month Low in December

Also this week, S&P Global reported on Tuesday that its Flash U.S. Composite Purchasing Managers Index (PMI) for December grew at the slowest rate in six months, weighed down by higher prices that analysts say are a consequence of the Trump tariff regime.

“Flash” PMIs are advance estimates of the final numbers that come out at the end of each month and are calculated using roughly 85% to 90% of the survey responses.

The index declined 1.2 points this month to land at 53. Readings above 50 imply expansion in the economy, while those below 50 imply contraction.

Signs of weakness in both the manufacturing and services sectors pulled the broader metric in the wrong direction. The Flash U.S. Manufacturing PMI fell 0.4 points to 51.8, which is a five-month low, while Flash U.S. Services PMI dropped 1.2 points to reach its lowest point in six months.

A prime culprit of the declining numbers across the board are rising input costs for which observers blame aggressive tariff policy, primarily.

In a statement, Chris Williamson, chief business economist at S&P Global Market Intelligence, said:

“A key concern is rising costs, with inflation jumping sharply to its highest since November 2022, which fed through to one of the steepest increases in selling charges for the past three years.”

“Higher prices are again being widely blamed on tariffs, with an initial impact on manufacturing now increasingly spilling over to services to broaden the affordability problem,” he added.

Indeed, price inflation in the services sector this month saw its sharpest increase since August 2022.

Sales of Existing Homes Rise for Third Straight Month Amid Broadly Anemic Market

Finally this week, the National Association of Realtors announced on Friday that sales of existing homes rose for the third straight month in November, climbing 0.5% from October to a seasonally adjusted annual rate of 4.13 million.

The continued improvement in sales is not surprising, given the steady decline in once-stubborn mortgage rates from around 6.75% in the summer to roughly 6.2% today.

“The low mortgage rate conditions of this autumn compared to the early part of the year is clearly helping some of the affordability conditions,” said NAR chief economist Lawrence Yun.

Still, the broader picture of the housing market reveals an image that remains all too gloomy. Overall, sales are off roughly 40% from where they were in 2020. And while mortgage rates are declining some, they remain roughly double the 3%-or-so rates to which consumers became accustomed a few years back – and which they remember very clearly.

A reluctance at taking on higher rate mortgages is just one obstacle facing homebuyers. They’re also balking at the historically high prices of houses as well as at the prospect of taking on new obligations during a period of growing economic uncertainty.

“A rebound in the housing market hinges on a solid labor market, income growth, and economic resilience amid the continued affordability crisis, elevated mortgage rates, and consumer discontent,” said Selma Hepp, chief economist at Cotality.

That’s all for now; have a wonderful weekend!

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