January Nymex natural gas (NGF26) on Monday closed up +0.321 (+7.35%),
January nat-gas on Monday rallied sharply to a 3-week high on the outlook for colder US temperatures, which are expected to boost heating demand for nat-gas. Forecaster Atmospheric G2 said that colder-than-normal temperatures are expected across the Northeast for January 3-7.
Nat-gas prices remained sharply higher after weekly storage figures from the EIA showed nat-gas inventories fell -166 bcf for the week ended December 19, a larger decline than the five-year average of -110 bcf for the week.
Higher US nat-gas production is bearish for prices. The EIA on December 9 raised its forecast for 2025 US nat-gas production to 107.74 bcf/day from its November estimate of 107.70 bcf/day. US nat-gas production is currently near a record high, with active US nat-gas rigs recently posting a 2-year high.
US (lower-48) dry gas production on Monday was 113.7 bcf/day (+6.9% y/y), according to BNEF. Lower-48 state gas demand on Monday was 103.8 bcf/day (+34.1% y/y), according to BNEF. Estimated LNG net flows to US LNG export terminals on Monday were 19.8 bcf/day (+5.3% w/w), according to BNEF.
As a supportive factor for gas prices, the Edison Electric Institute reported on December 10 that US (lower-48) electricity output in the week ended December 6 rose +2.3% y/y to 85,330 GWh (gigawatt hours), and US electricity output in the 52-week period ending December 6 rose +2.84% y/y to 4,291,665 GWh.
Monday’s weekly EIA report, delayed from last Thursday, was slightly supportive for nat-gas prices, as nat-gas inventories for the week ended December 19 fell by -166 bcf, a smaller draw than the market consensus of -169 bcf but larger than the 5-year weekly average draw of -110 bcf. As of December 19, nat-gas inventories were down -3.3% y/y and were -0.7% below their 5-year seasonal average, signaling tight nat-gas supplies. As of December 27, gas storage in Europe was 64% full, compared to the 5-year seasonal average of 75% full for this time of year.
Baker Hughes reported last Tuesday that the number of active US nat-gas drilling rigs in the week ending December 26 remained unchanged at 127, just below the 2.25-year high of 130 set on November 28. In the past year, the number of gas rigs has risen from the 4.5-year low of 94 rigs reported in September 2024.
One of the best trades of the year just staged a massive reversal.
Silver futures fell 8.7% on Monday, after topping $80 an ounce for the first time ever in overnight trading. The precious metal settled at $70.46 an ounce. It was the worst day for silver futures since February 2021.
The move is even more dramatic on an intraday basis. Peak to trough, silver plunged 15%, the biggest high-to-low change going back to August 2020 when it dropped 16.85%.
“This is a historic move,” said Jeff Kilburg, CEO and chief investment officer of KKM Financial. “We haven’t seen a move like this in a long time.”
Silver breached the $77 mark for the first time on Friday, while gold and platinum hit record highs, buoyed by expectations of U.S. Federal Reserve rate cuts and geopolitical tensions that fueled safe-haven demand.
Spot silver jumped 7% to $77.12 per ounce, after hitting an all-time high of $77.11, marking a 167% year-to-date surge driven by supply deficits, its designation as a U.S. critical mineral, and strong investment inflows.
Spot gold was up 1.1% at $4,529.8. per ounce, after hitting a record $4,533.14 earlier. U.S. gold futures for February delivery added 1.3% to $4,559.
“Expectations for further Fed easing in 2026, a weak dollar and heightened geopolitical tensions are driving volatility in thin markets. While there is some risk of profit-taking before the year-end, the trend remains strong,” said Peter Grant, vice president and senior metals strategist at Zaner Metals.
Markets are anticipating two rate cuts in 2026, with the first likely around mid-year amid speculation that U.S. President Donald Trump could name a dovish Fed chair, reinforcing expectations for a more accommodative monetary stance.
The U.S. dollar index was on track for a weekly decline, enhancing the appeal of dollar-priced gold for overseas buyers.
On the geopolitical front, the U.S. carried out airstrikes against Islamic State militants in northwest Nigeria, Trump said on Thursday.
″$77/oz and then $80 in silver is within reach by year-end. For gold, the next objective is $4,686.81, with $5,000 likely in the first half of next year,” Grant added.
Gold remains poised for its strongest annual gain since 1979, underpinned by Fed policy easing, central bank purchases, ETF inflows, and ongoing de-dollarization trends.
On the physical demand side, gold discounts in India widened to their highest in more than six months this week as a relentless price rally curbed retail buying, while discounts in China narrowed sharply from last week’s five-year highs.
Elsewhere, spot platinum rose 8.7% to $2,411.46 per ounce, having earlier hit a record high of $2,448.25, while palladium climbed nearly 10% to $1,850.76.
U.S. stocks closed higher on Wednesday, with each of the major indexes recording their fifth straight session of gains as the Dow Industrials and S&P 500 registered closing record highs in a broad rally during a holiday-shortened session. The TSX, which like American markets closed early at 1 pm ET, ended the session with slight losses.
Indexes have been climbing in recent days, buoyed in part by a rebound in AI-related names after last week’s selloff that was triggered by concerns about inflated valuations and high capital expenditures denting profits. Each of the major indexes recorded their fifth straight session of gains.
But recent data showed the economy remains resilient, and the market is still pricing in roughly 50 basis points of rate cuts from the Federal Reserve next year, although expectations for a January cut are low, according to CME’s FedWatch Tool. Data on Wednesday showed new applications for U.S. jobless benefits unexpectedly fell last week.
“Yields are behaving, volume is light, but the same issues remain in place – AI is strong, there is talk of some positives here, new OpenAI and Meta models, that will get the chatter up,” said Tim Ghriskey, senior portfolio strategist at Ingalls & Snyder in New York.
“The Fed is unlikely to lower rates again, at least for a while. Who knows what happens when May comes and we get a new head of the Fed? But we have a very low probability of a January cut.”
The Dow Jones Industrial Average rose 288.75 points, or 0.60%, to 48,731.16, the S&P 500 gained 22.26 points, or 0.32%, to 6,932.05 and the Nasdaq Composite gained 51.46 points, or 0.22%, to 23,613.31.
Trading volumes were thin. The U.S. and Canadian markets will remain shut on Thursday for Christmas. The TSX will also be shut on Friday for Boxing Day.
Volume on U.S. exchanges was 7.61 billion shares, compared with the 16.21 billion average for the full session over the last 20 trading days.
The S&P/TSX composite index ended down 58.97 points, or 0.2%, at 31,999.76. On Tuesday, the index posted a record closing high as the prospect of additional Federal Reserve interest rate cuts in 2026 helped boost commodity prices.
Since the start of this year, the index has advanced 29.4%, led by financial and metal mining shares, putting it on track for its biggest gain since 2009.
“Equity valuation in Canada is above its longer term average but nowhere near bubble territory,” strategists at CIBC Capital Markets, including Christopher Harvey, said in a note this week.
“Importantly, tight IG (investment grade) credit spreads are a positive sign for EPS (earnings per share) growth. When combined with capex tailwinds from data center buildout and government infrastructure priorities we see double-digit EPS growth supporting an above average market multiple.”
Canadian Prime Minister Mark Carney has committed to spending billions of dollars on measures to raise productivity and is aiming to speed up natural-resource project construction.
Domestic economic data was downbeat. According to a preliminary estimate, factory sales fell 1.1% in November from October on decreases in the transportation equipment and food subsectors.
The materials group, which includes metal mining shares, fell 0.9% as the price of gold edged back from an all-time high.
Energy was also a drag, losing 0.3%, as the price of oil dipped 0.1% to $58.35 a barrel.
Four of the ten major sectors ended higher, including technology. It added 0.2%.
On Wall Street, Micron Technology shares climbed 3.8% to end the session at a closing record of $286.68, continuing their rally after the company issued a strong forecast last week.
Bank stocks also supported gains, and financials were among the best-performing of the 11 S&P 500 sectors, with a 0.5% gain. The energy index was the only sector in negative territory on the day.
Recent gains in U.S. stocks have spurred hopes of a “Santa Claus rally,” a seasonal phenomenon where the S&P 500 posts gains in the last five trading days of the year and the first two in January, according to Stock Trader’s Almanac.
That period began on Wednesday and runs through January 5.
U.S. equities have swung sharply this year as tariff-related headlines, concerns about high valuations in technology and AI companies, and rapidly shifting interest-rate expectations boosted volatility.
Wall Street’s “fear gauge” was holding at levels not seen since December 2024. Still, the bull market, which began in October 2022, stayed intact as optimism around AI, rate cuts and a resilient economy supported sentiment, with all three main indexes set for their third straight yearly gain. In the year ahead, global markets will be closely watching potential successors to Fed Chair Jerome Powell, after President Donald Trump said on Tuesday that anyone who disagrees with him would “never be the Fed chairman.”
Nike jumped 4.6% after Apple CEO Tim Cook, the sportswear giant’s lead independent director, bought about $3 million of shares. Intel shed 0.5% following a report that Nvidia has halted tests to manufacture chips using Intel’s 18A production process.
Dynavax Technologies surged 38.2% after French drugmaker Sanofi said it would buy the U.S. vaccines company for around $2.2 billion (1.9 billion euros). U.S.-listed shares of Sanofi edged up 0.1%.
Advancing issues outnumbered decliners by a 2.37-to-1 ratio on the NYSE and by a 1.63-to-1 ratio on the Nasdaq.
The S&P 500 posted 22 new 52-week highs and 2 new lows while the Nasdaq Composite recorded 56 new highs and 160 new lows.
Bank of Japan’s summary of opinions from Dec. 18-19 meeting are released
(8:30 a.m. ET) U.S. goods trade deficit for October.
(8:30 a.m. ET) U.S. wholesale and retail inventories for October.
(10 a.m. ET) U.S. pending home sales for November.
Tuesday December 30
China current account surplus
(9 a.m. ET) U.S. S&P Cotality Case-Shiller Home Prices (20 city) for October. Estimate is a rise of 0.1 per cent from September and up 1.1 per cent year-over-year.
(9 a.m. ET) U.S. FHFA House Price Index for October. Estimates are increases of 0.1 per cent from October and 1.4 per cent year-over-year.
(2 p.m. ET) U.S. Fed minutes from Dec. 9-10 meeting are released.
Wednesday December 31
China PMI
(8:30 a.m. ET) U.S. initial jobless claims for week of Dec. 27.
Thursday January 1
Markets closed in North America, Europe, China and Japan
Friday January 2
China and Japan markets closed
Euro zone manufacturing PMI and private sector credit
(9:30 a.m. ET) Canada’s S&P Global Manufacturing PMI for December.
(9:45 a.m. ET) U.S. S&P Global Manufacturing PMI for December.
(10 a.m. ET) U.S. construction spending for November.
The dollar index (DXY00) today posted a new 2.75-month low but then recovered and is little changed. The dollar continues to trade on a weak note despite Tuesday’s stronger-than-expected US GDP report of +4.3% and the reduced odds for Fed easing. The markets on Tuesday reduced the odds for a -25 bp rate cut at the next FOMC meeting to 13% from 20%.
In a report released today, US weekly initial unemployment claims fell by -10,000 to 214,000 in the week ended Dec 20, showing a stronger labor market than expectations of 224,000. Continuing claims rose by +38,000 to 1.923 million from the previous week’s revised 1.885 million (preliminary 1.897 million), which showed a weaker labor market than expectations of 1.900 million.
China’s central bank today issued a cautious statement after its quarterly monetary policy meeting. The PBOC indicated that it is focused on long-term stability and suggested that it will not engage in sudden interest rate cuts to address problems such as property market weakness, weak domestic demand, and the trade war with the US.
The dollar continues to see underlying weakness as the FOMC is expected to cut interest rates by about -50 bp in 2026, while the BOJ is expected to raise rates by another +25 bp in 2026, and the ECB is expected to leave rates unchanged in 2026.
The dollar is also under pressure as the Fed boosts liquidity in the financial system, having begun purchasing $40 billion a month in T-bills in mid-December. The dollar is also being undercut by concerns that President Trump intends to appoint a dovish Fed Chair, which would be bearish for the dollar. Mr. Trump recently said that he will announce his selection for the new Fed Chair in early 2026. Bloomberg reported that National Economic Council Director Kevin Hassett is the most likely choice as the next Fed Chair, seen by markets as the most dovish candidate.
EUR/USD (^EURUSD) is down -0.14%. The euro has seen support this week from ECB member comments, indicating satisfaction with the current outlook for no interest rate cuts.
ECB Governing Council member Yannis Stournaras said Tuesday that the ECB is in a “good place” but needs to remain flexible to move policy in either direction. He said, “If we happen to be in a better or weaker position than expected, we will take appropriate action.”
ECB Governing Council member Gediminas Simkus on Monday indicated satisfaction with the current level of interest rates, saying, “We have inflation – headline and core – both now and in the near future, and mid-term, close to the 2% level. The interest rate is seen by many as at a neutral level. Economic growth has improved though remains sluggish.”
Meanwhile, ECB Governing Council member Peter Kazimir said on Monday that the ECB is comfortable with current rates but stands ready to act if conditions change. He said the current period of on-target inflation and steady economic expansion is “rather fragile” and that risks remain from tariffs and the Russia-Ukraine war.
Swaps are pricing in a 3% chance of a +25 bp rate hike by the ECB at the next policy meeting on February 5.
USD/JPY (^USDJPY) is down -0.28%. The yen has rallied this week after Finance Minister Satsuki Katayama said Japan has a “free hand” to intervene against currency moves that are out of line with fundamentals, a reference to the yen’s weakness last Friday after the BOJ’s rate hike.
The yen has underlying support from last Friday’s +25 bp rate hike by the Bank of Japan. The yen also has support from interest rate differentials, with the 10-year JGB yield posting a 26-year high of 2.073% on Monday.
The markets are discounting a 0% chance of a BOJ rate hike at the next meeting on January 23.
February COMEX gold (GCG26) today is down -12.5 (-0.28%), and March COMEX silver (SIH26) is down -0.082 (-0.12%).
Gold and silver today both posted new all-time highs on the nearest-futures charts but then fell back on some long liquidation pressure after this month’s sharp rallies. Precious metals prices were undercut by Tuesday’s +4.3% increase in US Q3 real GDP, which caused the markets to reduce the odds for a Fed rate cut at the next meeting to 13% from 20%.
Bullish underlying factors for precious metals include the FOMC’s recent announcement of a $40 billion per month liquidity injection into the US financial system. Precious metals prices are also being boosted by geopolitical risks, as the US is looking to seize two more Venezuelan-linked oil tankers. Also, Ukraine late last week hit an oil tanker from Russia’s shadow fleet in the Mediterranean Sea for the first time.
Precious metals have safe-haven support tied to uncertainty over US tariffs and geopolitical risks in Ukraine, the Middle East, and Venezuela. In addition, precious metals are supported by concerns that the Fed will pursue an easier monetary policy in 2026 as President Trump intends to appoint a dovish Fed Chair.
Strong central bank demand for gold is supportive of prices, following the recent news that bullion held in China’s PBOC reserves rose by +30,000 ounces to 74.1 million troy ounces in November, the thirteenth consecutive month the PBOC has boosted its gold reserves. Also, the World Gold Council recently reported that global central banks purchased 220 MT of gold in Q3, up +28% from Q2.
Fund demand for precious metals remains strong, with long holdings in silver ETFs rising to a 3.5-year high on Tuesday. Holdings in gold ETFs have recovered in the past two months and are just mildly below the 3.25-year high posted in October.
Gold broke above $4,500 an ounce for the first time on Wednesday while silver and platinum also marked new record highs, as safe-haven demand and expectations of further U.S. rate cuts next year fuelled speculative interest in precious metals.
Spot gold was up 0.2% at $4,494.49 per ounce, after marking a record high of $4,525.19 earlier in the session. U.S. gold futures for February delivery climbed 0.4% to $4,523.10.
Silver hit an all-time high of $72.70 and was last up 1.3% at $72.32 an ounce, while platinum peaked at $2,377.50 before paring gains to stand 1.6% higher at $2,312.70.
Palladium was down 1.5% at $1,830.37 an ounce, retreating after touching its highest in three years.
“The lack of any bearish factors and strong momentum, all backed by solid fundamentals, which include continued central bank buying, a falling U.S. dollar and some level of haven demand,” is supporting gold, said Fawad Razaqzada, market analyst at City Index and FOREX.com.
“Other base metals like copper have been climbing, which is providing support for the whole commodities complex in terms of metals.” Gold has risen more than 70% this year, its biggest annual gain since 1979, as investors flock to safe-haven assets amid geopolitical tensions and with expectations that the U.S. Federal Reserve will continue to ease monetary policy. U.S. President Donald Trump said on Tuesday he wants the next Fed chairman to lower interest rates if markets are doing well.
Non-yielding assets such as gold tend to do well in a low-interest-rate environment, with traders currently pricing in two rate cuts next year.
Silver has surged more than 150% year-to-date, outpacing gold on strong investment demand, its inclusion on the U.S. critical minerals list and rising industrial use.
“The risk of a major drop in the gold price would seem largely linked to a slowing of outright gold buying, such as by emerging market central banks,” analysts at Societe Generale said in a note. “Barring such an event, investor positions suggest that the extraordinary surge in gold prices is likely to continue, supporting our Commodities strategists’ forecast ($5,000/oz by end-2026).”
Platinum and palladium, primarily used in automotive catalytic converters to reduce emissions, are up about 160% and more than 100%, respectively, year-to-date, on tight mine supply, tariff uncertainty, and a rotation from gold investment demand.
Oil prices rose for a sixth day on Wednesday, supported by robust U.S. economic growth and the risk of supply disruptions from Venezuela and Russia, though prices were on course for their steepest annual decline since 2020.
Brent crude futures were up 13 cents, or 0.2 per cent, to US$62.51 a barrel at 9:25 a.m. ET, while U.S. West Texas Intermediate crude was up 22 cents, or 0.4 per cent, at US$58.60.
Both contracts have gained about 6 per cent since December 16, when they plunged to near five-year lows.
“What we’ve seen over the past week is a combination of position squaring in thin markets, after last week’s breakdown failed to gain traction, coupled with heightened geopolitical tensions, including the U.S. blockade on Venezuela and supported by last night’s robust GDP data,” IG analyst Tony Sycamore said.
U.S. data showed the world’s largest economy grew at its fastest pace in two years in the third quarter, fueled by robust consumer spending and a sharp rebound in exports.
Still, Brent and WTI prices are on track to drop about 16 per cent and 18 per cent, respectively, this year – their steepest declines since 2020 when the COVID pandemic hit oil demand – as supply is expected to outpace demand next year.
On the supply side, disruptions to Venezuelan exports have been the most significant factor pushing up oil prices, while Russia’s and Ukraine’s continued attacks on each other’s energy infrastructure have also supported the market, Haitong Futures said in a report.
More than a dozen loaded vessels are in Venezuela waiting for new directions from their owners after the U.S. seized the supertanker Skipper earlier this month and targeted two additional vessels over the weekend.
Additionally, oil shipments from Kazakhstan via the Caspian Pipeline Consortium are set to drop by a third in December to the lowest since October 2024 after a Ukrainian drone attack damaged facilities at the main CPC export terminal, two market sources said on Wednesday.
U.S. crude inventories rose by 2.39 million barrels last week, while gasoline stocks increased by 1.09 million barrels and distillate inventories rose by 685,000 barrels, market sources said, citing American Petroleum Institute figures on Tuesday.
The U.S. Energy Information Administration is due to release official inventory data on Monday, later than usual due to the Christmas holiday.
The Bureau of Economic Analysis (BEA) on Tuesday released its initial estimate of third-quarter GDP, which showed the economy grew at an annualized rate of 4.3% in the three-month period including July, August and September.
That figure topped the expectations of economists polled by LSEG, who had estimated 3.3% GDP growth in the third quarter.
The report also found that real GDP rose at an annualized rate of 3.8% in the second quarter. That followed a GDP contraction of 0.6% in the first quarter. Taken together, those three readings indicate the U.S. economy grew at a 2.5% annualized rate through the first three quarters of 2025.
Third quarter GDP was boosted by an acceleration in consumer spending. (Eduardo Munoz/Reuters)
The BEA said that the rise in real GDP in the third quarter reflected increases in consumer spending, exports and government spending that were partly offset by a decrease in investment. Imports also declined in the third quarter.
“Compared to the second quarter, the acceleration in real GDP in the third quarter reflected a smaller decrease in investment, an acceleration in consumer spending, and upturns in exports and government spending. Imports decreased less in the third quarter,” the BEA said.
Treasury Secretary Bessent has said the U.S. economy will hit 3% GDP growth this year. (FOX Business)
The report noted that real final sales to private domestic purchasers – which is the sum of consumer spending and gross private fixed investment – rose 3% in the third quarter, slightly faster than the increase of 2.9% in the second quarter.
The price index for gross domestic purchases rose 3.4% in the third quarter, a notable increase from the 2% increase in the second quarter. The personal consumption expenditures (PCE) index – an inflation gauge that is also measured in a standalone report that can yield different readings – rose 2.8% in the third quarter, compared with an increase of 2.1% in the prior quarter.
President Donald Trump’s tariffs disrupted international trade earlier this year, which pushed imports higher in the first quarter, which was followed by a decline in the second quarter. (Brendan Smialowski/AFP via Getty Images)
The third-quarter figure is expected to be revised with the release of a subsequent estimate. Typically, the BEA releases an initial estimate, a second estimate and a third estimate that serves as the final revision.
The government shutdown delayed the release of the initial third-quarter estimate, which was due at the end of October. It also affected the release of the second estimate, which was originally scheduled for Nov. 26.
The BEA said that its initial estimate replaces the advance and second estimates, meaning there will just be one additional third-quarter GDP release. Currently, the BEA’s schedule shows the final third-quarter GDP release on Jan. 22.
