Gold Gains Shine as Stocks Stall in December

Yardeni: Investor anxiety over the federal deficit is well founded

Stocks are heading for a quiet session on the final full trading day before the Christmas holiday, despite a heavy slate of economic data. The market is also just one day away from the official start of the Santa Rally — defined by the Stock Trader’s Almanac as the last five trading days of the year and the first two of the next. Equities could use the seasonal boost, as December has been lackluster for the S&P 500, which is up only 1.6%.

That muted performance stands in sharp contrast to another powerful month for precious metals. Gold has climbed 9% in December, while silver has surged 36%, with fresh record highs for the complex appearing increasingly likely.

Against this backdrop, Yardeni Research has lifted its outlook for gold. The firm noted that when gold broke above $3,000 earlier this year, it projected prices would reach $4,000 by year-end and $5,000 by the end of next year. With gold now trading above $4,500, Yardeni has raised its year-end 2026 target to $6,000 and reiterated its expectation that prices could reach $10,000 before the decade ends.

That forecast surpasses even some of Wall Street’s most bullish calls. JPMorgan, for example, expects gold to peak near $5,055 an ounce by the end of next year.

Yardeni argues that while gold and the S&P 500 often move in opposite directions over short periods, both have followed a similar upward trajectory over the long run — a relationship that supports its longer-term bullish thesis.

“The price of gold is rapidly converging with the S&P 500 index,” the firm said. “If the S&P 500 reaches 10,000 by the end of 2029, as we expect, gold should also be trading near $10,000, assuming historical trends hold.”

The research house turned bullish on gold in early 2024, when prices broke above $2,000, citing a surge in central-bank buying after the U.S. and EU froze Russia’s foreign reserves.

More recently, geopolitical risks — including tensions between the U.S. and Venezuela and renewed Ukrainian attacks on Russian ports — have added momentum to gold’s rally. Yardeni also agrees with the view that concerns over money printing to erode government debt are underpinning demand.

Although gold has lagged other precious metals this year — trailing silver by 139%, platinum by 133% and palladium by 95% — Yardeni says the move is unlikely to reflect a rebound in global economic growth, given the relatively modest gains in industrial metals.

Instead, the firm believes precious metals are signaling growing unease about an overly stimulative mix of U.S. fiscal and monetary policy in the year ahead. Even if the Federal Reserve pauses rate cuts in early 2026, it remains committed to purchasing roughly $40 billion in Treasury bills per month through April, according to the New York Fed.

Add to that expectations for potential $1,000–$2,000 government refunds to households and proposals for $2,000 “tariff dividend” checks, and the risk becomes clear: the federal budget deficit could balloon in early 2026. That, Yardeni warns, could push bond yields higher and leave stocks vulnerable to a pullback.