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.

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.

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.

Commodity analysts at multinational financial giant BMO are among those who believe the climate of uncertainty responsible for so much of gold’s recent success will remain solidly intact through the foreseeable future…and help drive both gold and silver even higher through the near term.

“The world has changed. A call on gold and precious metals is a call on the future state of the world and the nature of the transition that gets us there,” the analysts said in a recent note. “This calls us to consider bull case scenario for prices over the years in which a new world order is established, with potentially two more dominant spheres of influence, where nations in between are pushed to choose sides.”

Questions keep mounting about the continued stability of prevailing geopolitical and economic structures in an era of deglobalization and a greater-than-ever reliance on debt-based monetary systems. Accordingly, more strategists are coming to view the persistent embrace of precious metals during this already-historic bull run as reflective of a structural…even permanent…change in the ideal composition of model portfolios.

Strategists: Look for $8,650 Gold and $220 Silver by the End of Next Year

In their recent bit of analysis, BMO strategists posited that we currently may live in “a world where investors of all forms continue to add gold at a rate similar to, or even above, the rate seen over the first year of Trump’s second term.”

“If we assume average quarterly central bank purchases of ~8Moz (million ounces), quarterly ETF flows of ~4–5Moz, and ongoing erosion in real yields and the US dollar,” they added, “this brings us to a bull case scenario for gold prices of ~$6,350/oz by Q4 2026 and ~$8,650/oz by Q4 2027.”

The team at BMO additionally suggested that the profound uncertainty which has helped to propel gold ever higher is likely to provide a significant tailwind to other precious metals, such as silver, which have come to rely more on their industrial demand for upward momentum.

As the analysts put it:

“This would capture a scenario where this new global risk environment further ignites safe haven status in the non-gold precious metals too, amplified by retail participation, even though these metals have traditionally been more governed by their industrial metal characteristics.”

In this context, silver would be poised to exhibit much greater upside through the near to intermediate term, says BMO, which believes the white metal could reach $160 by the end of this year and $220 by the conclusion of 2027.

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.