Gold Dips Despite Safe-Haven Inflows, as Stocks Enjoy a Santa Claus Rally
Last week, precious metals and U.S. equities plummeted following news of a proposed 2025 slowdown to the Fed’s rate cutting campaign. This week was shortened in terms of trading days, as major markets were closed on Wednesday in observance of the Christmas Holiday.
On Monday, stocks rallied following Friday’s release of PCE data, which revealed a modest slowdown in inflation during the month of November. Gold started the week near $2,628 but edged lower on Monday, as the dollar index rose by 0.4%, nearing a two-year high of 108.439.
On Tuesday, the S&P 500 notched its fourth straight daily gain, and its best Christmas Eve session in over 50 years with a 1.2% gain. Elsewhere, gold and silver hovered around $2,618 and $29.60 respectively, as investors assessed the 2025 outlook interest rate outlook.
On Thursday, stocks in the U.S. reversed earlier losses as semiconductor and tech shares boosted major averages. Wall Street stocks often see gains during the so-called Santa Claus Rally, which occurs during the last five trading days of the year, and first two sessions of the new year.
Gold and silver also rose on Thursday, driven by safe-haven demand. The pair received a boost during light holiday trading, following news that Russia launched a Christmas Day attack on Ukraine’s electrical infrastructure. As a result, gold ended Thursday’s trading 0.8% higher at $2,635, while silver was modestly higher at $29.72 an ounce.
Gold edged lower this morning, but losses were limited by geopolitical concerns in the Middle East. At the time of writing, gold is eyeing a modest weekly downturn, at $2,620. Meanwhile, silver is 1.4% lower on a weekly basis, at $29.42.
Stock market futures also saw pressure this morning, as the 10-year Treasury yield hovered around a seven-month high of 4.601%. Despite what could be a downbeat day on Wall Street, major averages are closing in on weekly gains. Currently, the Nasdaq Composite is 2.4% higher, while the S&P 500 and Dow are eyeing weekly gains of around 2.2%.