Nugget News December

30 Day Market Moves

Gold Outlook...Gold prices closed a volatile week, down 2.43%, as market drivers shifted between easing geopolitical tensions, a weaker dollar, and speculation over the Federal Reserve’s policy path. While early-week losses reflected profit-taking and reduced safe-haven demand, a late-week recovery highlighted persistent uncertainties ahead of pivotal U.S. jobs data and its implications for monetary policy. Inflation data released last week, showed persistent inflationary pressures, complicating the Federal Reserve’s ability to move aggressively toward rate cuts. Nonetheless, expectations for easing remain, with market pricing showing a 66% likelihood of a 25-basis-point reduction in December.

-While safe-haven demand was subdued earlier in the week due to optimism over ceasefire talks in the Middle East, persistent risks, such as the ongoing Russia-Ukraine conflict, offer a floor for gold prices.

Silver Outlook...While Russia threatens a possible nuclear-capable ballistic missile strike on Ukraine, followed by firing a series of Intermediate Range Ballistic Missiles (IRBM) on 17 targets, including defense and energy facilities. The prevailing war between Russia and Ukraine keeps the demand for safe-haven assets intact. This was the second-largest Russian attack on Ukraine, according to Ukraine's energy ministry. Historically, the safe-haven appeal of precious metals such as Silver increases at times of global market uncertainty or heightened geopolitical risks.

- The historical evidence suggests that the gold-to-silver ratio entering the 80 to 100x range may act as a signal for a significant rally in the price of silver. This ratio suggests that silver is extremely undervalued relative to gold.

Gold & Bitcoin Not The Same?...People often call Bitcoin “digital gold” and categorize them as similar assets. While there are some similarities, there are significant differences between the two, and they shouldn’t be considered “the same.” As already noted, Bitcoin is much more volatile than gold, but that’s not the only difference. Bitcoin tends to behave more like a risk asset and correlates more closely with tech stocks. For instance, Bitcoin failed as a safe-haven hedge as the markets tanked in 2018, instead correlating more closely with other risk assets. The cryptocurrency's performance was down on par with tech stocks, falling 55 percent in the fourth quarter along with the stock market. Meanwhile, gold was up significantly in the same period.

- Bitcoin investors know the anxiety caused by protracted selloffs. One way to mitigate this is to sell Bitcoin as it goes into a bearish period and then buy again at the bottom using gold as the anchor.

AI Gold Demand... Could the Artificial Intelligence (AI) revolution boost gold demand? According to a report by the World Gold Council, the answer is yes. Gold's excellent conductivity and its malleability make it an important component in the manufacture of electronic devices. Gold can be formed into extremely thin wires, making the metal ideal for use in small computer chips. AI requires a significant electronics infrastructure, and gold is an essential component in the manufacturing of AI-enabled devices. Gold's conductivity makes it ideal for transmitting data at extremely high speeds with minimal energy loss, a crucial requirement for AI systems. Gold's resistance to corrosion also extends the life of electronic components. This is critical for continuous and intensive AI operations.

-The World Gold Council projects that the demand for more sophisticated hardware will rapidly increase with the advancement of AI.

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