Last week: US inflation (PCE) released lower, FED to cut by 25bps on Wed; Bond yields higher; Stocks and Oil higher
WEEKLY TRENDS
After the release last week of the eagerly awaited US Nov PCE inflation data (Core at +2.8% vs 2.9% expected) added to the US ISM manufacturing falling to 48.2 (Nov was the lowest reading in 4 months), the FED is widely expected to cut its FED funds rate by 25bps this coming Wednesday
Also coming up next week, a few important AI related US Q4 corporate earnings releases with Oracle, Adobe, Synopsys and Broadcom. There shall also be the releases of late US macro statistics with Oct and Nov PPI, supposedly to be released on Thursday
The FED is the first of many central banks to have to decide on monetary policies this month (ECB, BOE and BOJ will be the following week)
This end of year also announces the releases of bank analysts’ forecasts for stock indices in 2026 (mainly the SP500). Most of them see the major US index progressing further (between 5 and 15%)
Of note, Silver remained hot last week with a new ATH, while Gold suffered from higher Long Dated US Bond yields. Oil grinded higher with the OPEC+ members’ decision not to raise their production target for early 2026.
Central Bank rate decisions: FED/FOMC (10 Dec), ECB (17), BOE/MPC (18), BOJ (19)
WHAT ANALYSTS SAY
World Gold Council: Gold outlook 2026
Natixis IM: S&P500, a hidden risk of concentration
Carmignac: Global outlook for 2026
World Gold Council, 5 December 2025
Author: gold.org
Gold has experienced a remarkable 2025, achieving over 50 ATHs and returning 60%. This performance has been supported by a combination of heightened geopolitical and economic uncertainty, a weaker US dollar, and positive price momentum. Both investors and central banks have increased their allocations to gold, seeking diversification and stability. Looking to 2026, the outlook is shaped by ongoing geoeconomic uncertainty. The gold price broadly reflects macroeconomic consensus expectations and may remain rangebound if current conditions persist. However, taking cues from this year, 2026 will likely continue to surprise. If economic growth slows and interest rates fall further, gold could see moderate gains. In a more severe downturn marked by rising global risks, gold could perform strongly. Conversely, a successful outcome from policies set by the Trump administration would accelerate economic growth and reduce geopolitical risk, leading to higher rates and a stronger US dollar, pushing gold lower. Additional factors, such as central bank demand could also influence the market. Most importantly, gold’s role as a portfolio diversifier and source of stability remains key amid continued market volatility.
Impact on gold: moderately bullish
The combination of lower interest rates and a weaker dollar paired with heightened risk aversion would create a continued supportive environment for gold. Our analysis shows that, in this environment, gold could rise 5% – 15% in 2026 from current levels, depending on the severity of the economic slowdown, and the speed and magnitude of the rate cuts. This would represent a solid return in a normal year, but following 2025’s strong performance, it would still be considered a noteworthy follow-up. The combination of lower interest rates and a weaker dollar – both of which remain cyclically high – have historically been a source of support for gold. In addition, continued strategic central bank buying and potential new investment entrants, such as insurance companies in China or pension funds in India, could further support gold’s positive trend even if the economic environment remains relatively benign.
Impact on gold: bullish
The combination of falling yields, elevated geopolitical stress and a pronounced flight-to-safety would create exceptionally strong tailwinds for gold, supporting a sharp move higher. Under this scenario gold could surge 15% – 30% in 2026 from current levels. Investment demand, particularly via gold ETFs would remain a key driver, offsetting weakness in other areas of the market, such as jewellery or technology.
Rising prices have historically spurred investor interest, accelerating momentum. Global gold ETFs have seen US$77bn of inflows so far this year, adding more than 700t to their holdings. Even if we move the starting point back further to May 2024, collective gold ETF holdings are up by approximately 850t. This figure is less than half of what we have seen in previous gold bull cycles leaving ample room for growth.
Impact on gold: bearish
Rising yields, a stronger dollar, and the shift toward risk-on positioning weigh heavily on gold, prompting a notable withdrawal of investor interest. With hedges unwound and retail demand softening, the backdrop turns decidedly negative, resulting in a gold price correction of between 5% and 20%, from current levels. Gold ETF holdings could see sustained outflows as investors rotate into equities and higher-yielding assets. Their magnitude would be a function of the reduction in gold’s risk-induced premium, which has been a mainstay since the invasion of Ukraine in 2022. However, historical analysis also shows that opportunistic buying from consumers and long-term investors could act as a buffer in this kind of environment. Despite this, the combination of higher opportunity costs, risk-on sentiment, and negative price momentum could create challenging conditions for gold, reinforcing this as the most bearish scenario in our outlook.
Wildcards
Beyond the scenarios outlined above, central bank demand and recycling supply are notable wildcards. These factors sit outside our traditional quantitative modelling for a few reasons but could materially influence gold markets.
Natixis IM, 5 December 2025
Author: Bill Nygren, Robert Bierig, US equity Portfolio Managers at Harris - Oakmark
The great strength of the S&P 500 has always been its diversity. This made it the simplest way to gain diversified exposure to large US caps. But the extraordinary success of the tech giants has reduced this diversification: the index is now much more focused on the technology sector and on a small number of highly dominant companies. Bill Nygren, US CIO and fund manager at Harris Oakmark, points out that the concentration of technology is underestimated. Officially at 35%, it would be much higher without a reclassification carried out fifteen years ago: "The S&P 500 arbitrators removed companies such as Alphabet and Meta from the technology sector. Without this reclassification, technology would now account for 44%, which is 5 points higher than at the peak of the dot-com bubble." The change is clear: in 2005, the sectors were relatively balanced. Today, technology largely dominates.
Another sign of concentration is the increase in the weighting of the largest stocks. The top four capitalisations in the S&P 500 now account for more than 25% of the index, compared with 11% twenty years ago. This puts the S&P 500 beyond the limits set by the SEC for so-called ‘diversified’ funds. According to the regulator, if positions exceeding 5% cumulatively exceed 25%, the fund must be registered as non-diversified – a clear signal of additional risk for investors. At this stage, an active fund cannot fully replicate these weightings without changing its regulatory status.
Not all concentration is necessarily problematic.
If an investor believes that technology megacaps will continue to outperform, maintaining significant exposure to the S&P 500 may still be appropriate. Moreover, this phenomenon is not unique to the S&P 500: the MSCI World, for example, has also concentrated around the same stocks. But for those who wish to reduce equity risk through greater diversification, it may be useful to review the allocation between indices and individual stocks.
For those who want to maintain strong exposure to US equities while diversifying further, Robert Bierig suggests considering the Russell 1000 Value. He believes this index is ‘more diversified in almost every respect’. With 870 stocks, it is less concentrated on the largest capitalisations and has a more balanced sector distribution. He also emphasises the changing composition of the index: ‘Many people imagine that the Russell Value is mainly composed of banks, energy, utilities or declining industrial companies. This is not true. Today, it is a dynamic index that even includes former growth leaders such as Amazon, Alphabet, Analog Devices and Salesforce.’
Investors can therefore diversify their equity exposure by transferring part of their investments from the S&P 500 to the Russell 1000 Value — or to an active US equity strategy. This can also help mitigate another risk of the S&P 500: its high valuation. In ten years, its price-to-earnings ratio has risen from 17× to 23×. But this increase is highly concentrated: it comes mainly from a small number of technology megacaps. The number of S&P 500 companies trading below 14× earnings has remained stable for ten years, at around 150 stocks.
This heterogeneity is of particular interest to Robert Bierig: ‘It is in this part of the market that we see the most potential for future returns in our portfolio, and it is also what excites us in terms of diversification for investors who are already heavily exposed to the S&P 500.’
Bill Nygren shares this analysis: ‘If AI megacaps continue to be the best performers in the market, our portfolio will not be the highest ranked. But more than ever, it will be a powerful diversifier against an S&P 500-focused portfolio.’
Carmignac, 5 December 2025
Author: Raphael Gallardo, Chief Economist
Economic outlook:
United States: all-out stimulus (fiscal, monetary, banking deregulation) by a Trump on the defensive as the mid-terms approach.
Eurozone: Reacceleration thanks to the Merz plan and the lack of adjustment in France. The ECB remains cautious in the face of slow disinflation – unless the OAT market surges.
China: The 15th five-year plan reaffirms the priority given to the war economy. Nevertheless, a new fiscal stimulus is essential to maintain growth at 4%. A huge trade surplus makes it possible to monetise deficits without weakening the currency.
Japan: we expect the Takaichi stimulus and political pressure on the central bank to form an explosive cocktail for Japanese bonds. The markets will force an abrupt policy shift, threatening a disorderly unwinding of yen carry trades in the process.
Investment strategy:
Resilient growth, supported by generous fiscal policy, cannot hide the end-of-cycle dynamics and high valuations. Equities and bonds remain the most attractive asset classes, but caution is warranted with regards to sovereign bonds. The concentration of global growth drivers (AI, defence, fiscal largesse) reinforces the need for maximum diversification across sectors and geographies. Persistent inflation, fiscal activism and unstable correlations between equities and bonds require a more agile and selective investment strategy, where initiative takes precedence over wait-and-see and passive approaches.
Equities: a barbell strategy combining technology leaders with defensive healthcare and consumer stocks to capture both ends of a two-speed economy.
Bonds and currencies: Long-maturity sovereign bonds issued by countries with deteriorating public finances offer little appeal, while inflation-linked bonds, high-quality credit and currencies supported by demand for essential commodities or fiscal discipline offer an attractive risk/return profile.
The sluggishness of global growth is inherent to our post-Pax Americana era, where zero-sum interactions dominate at both the international and sub-national levels. Voters' frustration with this weak and uneven growth is pushing governments towards more populist policies. Central banks have no choice but to monetise this fiscal flight forward, under the guise of their mandate for financial stability. But the bond vigilantes are on the lookout. It doesn't matter who wins the 2026 Liz Truss prize, whether it's Trump, Takaichi, Starmer or Macron. The dishonour will be shared by all, given the cointegration of global bond flows. China will not escape the shockwave, which will bypass the wall of exchange controls and take the trade channel.
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