Hello, my friends!

In what was a relatively light week for economic data, the most notable numbers that emerged were those which revealed inflation remains a significant problem despite the progress made over the last three years.

Just when it seemed safe to venture back into stores and restaurants, the Labor Department announced on Friday that wholesale price pressures accelerated sharply last month.

According to the report, the headline producer price index (PPI) rose 0.5% on a monthly basis, faster than the 0.3% rate projected by economists and 0.1 percentage point faster than the pace set in December.

Year over year, the index actually slowed slightly, declining to 2.9% from 3.0% in December. However, that’s substantially higher than the 2.6% rate economists had projected and still a long way from the Federal Reserve’s long-established 2% target.

Core PPI, which strips out the volatile food and energy sectors to provide a clearer look at underlying price pressures, proved to be an even bigger disappointment. Month over month, core PPI increased 0.8%, faster than December’s 0.6% pace and MUCH faster than the 0.3% that economists were expecting. Annually, wholesale inflation surged 3.6% in January, sharply higher than both the 3.3% pace set the month prior and the 3.0% consensus estimate.

Analysts placed responsibility for the reinvigorated inflation squarely at the feet of tariffs, with Michael Reid, U.S. economist at RBS Capital Markets, telling CNN:

“Tariffs are being passed through along the supply chain. And so, our worry is that this is not the end of the pass through. We have not yet seen the full impact on consumer prices in the goods space.”

Key Metric Sends Mixed Messages on Housing Market Health

Also this week, a popular gauge of U.S. real estate prices proved to be the bearer of both good and bad news for the housing market.

Tuesday saw the release of the S&P Cotality Case-Shiller National Home Price Index for December, which revealed that while the benchmark metric rose for the fifth straight month, climbing 0.4%, it increased for calendar year 2025 at its weakest annual pace since 2011.

According to the data, the index increased at a rate of 1.3% for the year, a tenth of a percentage point slower than the 12-month growth rate through November but in line with the projections of economists.

Despite finishing 2025 with a positive year-over-year rate of growth, the meager 1.3% gain speaks directly to key challenges that have been faced by homebuyers for some time.

“Two structural forces have reshaped the market over recent years: mortgage rates and inflation,” Nicholas Godec of S&P Dow Jones Indices said in a statement. “The 30-year mortgage rate closed 2025 at 6.2%, well above the 4.8% 10-year average and a sharp contrast to the 3.9% average that prevailed from 2016 through 2020. Meanwhile, annual inflation for 2025 came in at 2.7% — modestly below the 3.1% 10-year average — but still outpaced home price appreciation by 1.4 percentage points, effectively eroding real home values for most owners.”

Indeed, when adjusted for inflation, the annual change for 2025 saw the index post a net decline, dropping 1.9%.

Chicago Manufacturing Index Reaches Highest Level in Nearly Four Years

On Friday, the Institute for Supply Management revealed that the Chicago Business Barometer…a closely watched regional gauge of U.S.manufacturing activity…rose 3.7 points this month to land at 57.7, the highest level reached by the metric in nearly four years.

The result is well above the 52.5 projected by economists and marks the second straight month that business activity in the Chicago area has expanded (values above 50 imply expansion). Prior to January, the index had come in below 50, which is contraction territory, for 25 consecutive months.

Of the five component measures that make up the overall number, four – the Production, Employment, New Orders and Supplier Deliveries Indexes – increased this month. The Production Index put in a particularly good showing, rising 9.0 points to reach its highest level in more than two years and come in above 50 for the second month in a row.

Only the Order Backlogs Index moved in the wrong direction, dropping 4.5 points to slip back into contraction territory after landing above 50 in January.

Consumer Sentiment Improves This Month Thanks to Greater Optimism About Jobs Market

Finally this week, a widely followed gauge of consumer sentiment rose more than expected this month, fueled largely by Americans’ more upbeat view of the nation’s labor market.

On Tuesday, The Conference Board reported that its proprietary Consumer Confidence Index (CCI) increased by 2.2 points in February to land at a reading of 91.2, significantly above the 87.5 projected by economists.

Notably, a larger percentage of survey respondents said this month that jobs are “plentiful” rather than “hard to get.” Unsurprisingly, this more favorable view of the job market comes on the heels of the government’s January employment report, which saw the economy add a more-than-expected 130,000 jobs and the official unemployment rate decline to 4.3% from 4.4% in December.

Also notable from this round of data is that the Expectations Index, a component measure of the headline metric that evaluates consumers’ six-month outlook for the economy, rose nearly five points to come in at 72.0. Still, despite the improvement, that key sub-index landed below the critical level of 80 for the 13^th consecutive month. According to the board, Expectations Index values less than 80 imply that recession could lie ahead.

In her summary of the February results, Conference Board chief economist Dana Peterson said:

“Confidence ticked up in February after falling in January, as consumers’ pessimistic expectations for the future eased somewhat. Four of five components of the Index firmed. Nonetheless, the measure remained well below the four-year peak achieved in November 2024 (112.8).”

That’s it for now; have a marvelous 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.

We are nearly four years into the current gold bull market. Yet despite that impressive lifespan…one during which gold has risen 200% and eclipsed the once-mythic $5,000-per-ounce mark…numerous credible strategists remain exceptionally enthusiastic about gold’s near-term prospects.

Among the metal’s biggest believers are analysts at the World Gold Council (WGC), who recently published a report detailing why, in their assessment, gold should continue to shine brightly through at least the end of 2026.

To be sure, one reason gold remains in very high regard is that the profound geopolitical tension which has generated a substantial risk premium on behalf of the metal is expected to remain intact. But in the opinion of WGC observers, there’s no shortage of other factors poised to support gold-price strength in the months ahead.

Apparent Strength of Global Markets Masks “Very Real Risks” to Equities

One of the more prominent potential drivers, they say, pertains to the lofty heights at which equity valuations now are sitting amid an especially precarious global environment:

“Risk assets are sitting at uneasy highs against a backdrop of a world in turmoil. Yes, there are a host of tailwinds that should support a revival in growth throughout the year, including easier monetary policy and the global fiscal boost. But the consensus narrative of a global economy that has proved ‘robust’ in the face of tariffs and turmoil underestimates the very real risks that remain.”

Helping to both underscore and exacerbate that risk is the mountain of margin debt to which investors have turned amid the climate of euphoria that has come to broadly characterize market activity.

“The likelihood of reaching breaking points in equity markets during 2026 is difficult to ascertain with any level of confidence,” the WGC report noted, “but for a hint as to the bumpy road ahead look no further than the surging US margin debt.”

FINRA Margin Debt Now at Record $1.3 Trillion

Look no further, indeed. FINRA (Financial Industry Regulatory Authority) margin debt currently sits at a record ≈$1.3 trillion and has grown 37% over the past year, significantly outpacing the 20% gain achieved by the S&P 500.

“While growth in margin debt does not necessarily signal an impending peak in the stock market, it is an indication of increasing financial speculation and growing risks to market stability,” the WGC warned.

Connecting the dots further, WGC analysts noted “it would only take a couple of missed earnings targets to puncture confidence. This, in turn, could result in an unwinding of investor leverage positions (potentially magnifying the downside risks to stock prices) and lead to greater safe-haven demand, notably gold.”

“In fact,” the council added, “with few exceptions, gold has been especially effective during such periods of systemic risk, generating positive returns and reducing overall portfolio losses.”

Continued Need to Blunt Inflation “Should Support Gold in the Medium Term”

Another compelling reason to believe gold’s impressive strength may persist, the WGC said, is the ongoing uncertainty about where inflation is headed and how continued price pressures might be handled by the Federal Reserve. Although down significantly from the highs (of this cycle) reached nearly four years ago, inflation remains remarkably sticky, as evidenced by the acceleration of both monthly and annual core wholesale inflation in January.

“If core inflation rises meaningfully the Fed will have to raise short-term rates again. In other words, the bond market is not out of the woods, and another cyclical upleg in developed market yields could be in the offing,” the WGC said. “And while a clear turn towards policy hawkishness could curb gold demand in the near term due to a higher opportunity cost, gold should be supported in the medium term via stronger inflation-hedging demand and a higher stock-bond correlation.”

Additionally supporting the WGC’s idea that inflation-energized gold buying could trump the negative impact on metals of tighter monetary policy is the way in which gold performed during 2022 and 2023…a period which saw the central bank raise interest rates at the fastest pace in 40 years. While financial markets were basically flat during those years, the supposedly higher-rate-averse gold climbed nearly 14%.

To be sure, it wasn’t just a greater belief in the potential damage that could be wrought by inflation which pushed gold higher amid an aggressive tightening campaign; it also was the persistent and energetic purchasing of gold by central banks as well as the multitude of risks posed by a big jump in geopolitical uncertainty.

WGC Analysts: “Need for Portfolio Resilience Has Rarely Been More Pressing”

But that’s the point, as well as the foundational basis for the WGC’s belief in gold’s continued viability; namely, that there continue to be various ongoing risks to the stability of the global order…and that as long as there are – and especially as long as gold remains significantly under-owned as a “long” strategic portfolio asset – the case for the metal remains nothing short of compelling.

“As investors navigate a landscape marked by stretched valuations, persistent macro risks, and rising pockets of financial excess, the need for resilience in portfolios has rarely been more pressing,” the WGC said in delivering its punchline, adding:

“In this environment, gold’s strategic role remains as relevant as ever. Its historical ability to provide diversification, mitigate drawdowns during periods of market stress, and perform even after strong run-ups, reinforces its value as a core, long-term portfolio component.”

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!

This week’s economic data releases were dominated by fresh numbers on the health of the labor market, including those cultivated by the latest Job Openings and Labor Turnover Survey…known more commonly as the JOLTS report…as well as by the widely followed Challenger Job Cuts report published by outplacement firm Challenger, Gray & Christmas.

Conspicuously absent from this week’s employment updates was the government’s headline nonfarm payrolls report, which fell victim to the partial shutdown and now is scheduled for release next Wednesday.

As for the jobs updates we did get, the aforementioned JOLTS report for December was among the biggest. On Tuesday, the Labor Department announced job openings fell that month to their lowest level in five years, tumbling to 6.54 million from a downwardly revised 6.93 million in November. The number was well below the projections of economists, who expected to see 7.25 million openings in December.

As of this latest report, job openings in the U.S. now are down a whopping 45% from the peak of nearly 12 million reached in March 2022.

Also sinking like a stone over the last four years is the number of vacancies per unemployed worker. In 2022, the ratio stood at 2 to 1. As of this latest JOLTS report, there was less than one vacancy…0.9, to be exact…for every out-of-work American.

ADP Says Private Sector Payrolls Increased by Just 22,000 Last Month

On Wednesday, payroll processor ADP offered up additional concerning news about the strength of the labor market with the release of its National Employment Report for January, which revealed the private sector added just 22,000 jobs in the first month of 2026. That total is considerably less than the 37,000 jobs picked up in December and well below the consensus estimate of 45,000 jobs.

In fact, the January ADP report would have reflected a net loss of jobs if not for the outsized contribution of the education and health services sector, which alone contributed 74,000 jobs to the cause. The professional and business services sector saw the biggest drop, losing 57,000 jobs last month. Also heading in the wrong direction was manufacturing, which gave up 8,000 jobs. According to ADP data, the manufacturing sector has shed jobs every month since March 2024.

Referencing the ongoing softness in the jobs market, ADP chief economist Nela Richardson told CNBC:

“Hiring is softening. It continues a pattern that we’ve noticed for the past three years. Employers are very reticent to hire in the current economy.”

Outplacement Firm Challenger Says Job Cuts Last Month Were the Highest of Any January in Last 17 Years

Still more worrisome data about the health of the job market emerged this week when outplacement firm Challenger, Gray & Christmas reported on Thursday that U.S. employers announced a total of 108,345 layoffs in January. That’s a 205% increase from December 2025, a 118% year-over-year increase, and the highest total for any January going back to 2009, when the impacts of the global financial crisis were continuing to sweep across the economic landscape.

Also, companies announced just 5,306 new hires last month…which is the lowest for any January since 2009. Beyond its statistical significance, that data is notable because it raises the possibility that the stasis which has characterized the so-called “no hire/no fire” labor market may be headed for an unpleasant end.     

“Generally, we see a high number of job cuts in the first quarter, but this is a high total for January,” said Andy Challenger, chief revenue officer at his namesake firm. “It means most of these plans were set at the end of 2025, signaling employers are less-than-optimistic about the outlook for 2026.”

Factory Activity Saw Big Improvement in January    

Last but certainly not least this week, the Institute for Supply Management announced Monday that its January Manufacturing Purchasing Managers’ Index reentered expansion territory for the first time in a year, climbing to 52.6 from 47.9 in December. Measures above the neutral level of 50 imply growth of the economy while those below 50 suggest economic contraction.

The January index number was well above the 48.5 projected by economists, as well as the highest reading in nearly 3½ years.

Notably, the New Orders Index – a key component measure of the overall index – played a large part in the broader metric’s improvement, surging last month to 57.1 from 47.4 in December.

Still, it remains unclear where the index goes from here. Referring to survey feedback from business owners, Susan Spence, chair of the ISM Manufacturing Business Survey Committee, suggested January’s upbeat numbers “are tempered by commentary citing that January is a reorder month after the holidays, and some buying appears to be to get ahead of expected price increases due to ongoing tariff issues.”

That’s it for now; have a fantastic 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.

Strategists at CIBC (Canadian Imperial Bank of Commerce) now say there’s really no reason to question gold’s continued viability as long as dollar weakness remains in the cards.

In fact, say the analysts, the impact of that predicted, ongoing weakness is likely to be so profound that they see the price of gold continuing to venture much further into record territory over the next two years, at least.

In a recently published update to earlier price forecasts, the commodities team at CIBC said they now see the price of gold averaging $6,000 per ounce in 2026, a marked increase from their projection of $4,500 per ounce made in October.

CIBC Strategists: Relentless Pressure on the Dollar Should Usher in $6,500 Gold Next Year

What’s more, they believe the price of gold will keep rising into 2027, rising to $6,500 per ounce that year. That would be a 30% increase from present levels.

Explaining why they believe that dollar distress will play such a prominent role in supporting gold prices through the foreseeable future, the analysts said:

“Dollar debasement is likely to persist as the central banks and investors react to heightened uncertainty by quietly allocating away from U.S. Treasuries. We believe further pressure on the dollar will come from rate cuts and continued tension between the Fed and the White House, and we believe Kevin Warsh will look to tighten the Fed balance sheet in order to lower interest rates for Main Street.”

Indeed, while Fed chair nominee Warsh historically has been a fan of tighter monetary policy and a critic of quantitative easing, he has, more recently, seemed to take a decidedly dovish tilt, as the strategists at CIBC noted.

“He has argued for tighter Fed balance sheets, which he asserts would tamp inflation and allow for lower rates for Main Street,” they said. “More recently, he has indicated support for Trump’s government efficiency drive, noting it could temper inflation and allow for lowering of rates.”

That said, CIBC analysts ultimately believe that the matter of gold-favorable currency debasement has become a structural feature of the global economy and something that transcends monetary policy in the U.S.

“With the decades-long de facto safe-haven asset, U.S. Treasuries, no longer considered ‘risk-free,’ investors and central banks are looking for alternatives,” the analysts noted. “The pickings are slim. Most Western economies are facing near-record debt-to-GDP ratios, and most are looking to inflate rather than constrain their way out of the dilemma. Investor confidence in fiat currencies has eroded, and gold has seen much of this flight to safety.”

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.