Here we are on the last Monday of the year. While the S&P 500, NASDAQ, Dow Jones, and even gold (XAUUSD) have all posted solid gains since the start of 2025, calling the year “calm” would be a stretch — especially on the geopolitical front. There are some signs of easing tensions, but it’s far too early to declare a new era of peace.
For instance, according to CNN, the Israeli prime minister will meet with Trump to request approval for another operation in Gaza. Meanwhile, there are signs of progress in the conflict between Russia and Ukraine, which has led to a brief decline in precious metals, but the most difficult part is yet to come.
Markets, however, don’t seem too worried about the uncertain prospects for geopolitical de-escalation. Risk assets continue to trend upwards, and according to investment bank forecasts, optimism appears poised to persist into next year. The average year-end 2026 target for the S&P 500 among major strategists stands at 7,555.
One of the key drivers is expected to be a still-strong economy, which supports corporate profits.
In this regard, in the third quarter, US GDP grew by 1.1% quarter-on-quarter, 2.3% year-on-year, with consumer spending contributing 2.4 percentage points to growth, led by services. The challenge is that, with such strength, the Fed has less incentive to cut rates, so Treasury yields are not falling rapidly.
Looking at this week, the holiday schedule — including the New Year’s closure — means things are likely to be quiet. The main focus will be on November’s housing market data, the release of the minutes from the latest Fed meeting, and weekly jobless claims – with the latter two crucial for understanding future rate moves.
Looking ahead to this week, given the holiday calendar, things are likely to be quiet. Attention will mainly focus on November’s real estate market data, the release of the minutes from the Fed’s latest meeting, and weekly unemployment claims, with the latter two being key to understanding future interest rate movements.
If the situation continues to evolve according to a more positive scenario, i.e., if the labor market deteriorates but not at a rapid pace, it is unlikely that the regulator will rush to lower interest rates. For gold, in particular, this may not be the best news, and the opposite could happen with the dollar index.
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