There was a last-minute selloff in precious metals markets on Wednesday as investors cashed in some of the year’s massive gains in gold, silver and platinum, while stocks quietly consolidated their best year since before the COVID pandemic.
Most markets were on end-of-year autopilot after a roller coaster 12 months of geopolitics-related swings, extreme dollar weakness, bond market jitters and the ongoing frenzy around AI stocks.
But it wasn’t the case for all.
Silver prices jerked back nearly 6% in London following their astonishing 150% surge this year. Gold, which has had its best year since the 1979 oil crisis, dipped 1%, while an 8% plunge in platinum took some of the shine off its 120% 2025 gain.
European share markets were little changed meanwhile, hovering near record highs after a stellar – albeit jarring – year that has even seen the region’s banking and weapons sector stocks both handsomely outperform the mighty ‘Mag 7’.
MSCI’s broadest index of world stocks was also flat after its $15 trillion rally this year and as investors digested Tuesday’s Federal Reserve December meeting minutes that underscored deep divisions among policymakers about U.S. interest rates.
The index is poised to clock a 21% increase for the year, its sharpest rise since 2019, mainly on a strong rally in chipmakers amid the boom in artificial intelligence-related stocks.
“Notwithstanding a few little shocks, the year has been terrific for investment returns,” said Kyle Rodda, senior financial analyst at Capital.com.
“The gains have been a little concentrated, obviously, but the combination of the AI boom and accommodative monetary and fiscal settings have driven risk assets higher and around record levels.”
NEW YEAR, NEW QUESTIONS
In currencies, the dollar ticked higher but was set for a 9.4% drop for the year, its biggest fall since 2017, which leaves the euro and most other currencies – with the exception of the yen – with sizeable gains.
Investor focus next year will continue to be heavily on the Fed’s interest rate moves, especially with U.S. President Donald Trump teasing this week that he plans to announce his hotly awaited new chairperson at the central bank in the coming weeks.
Tuesday’s December meeting minutes had underscored the challenges policymakers and markets will be facing.
“Most participants” ultimately supported a cut earlier this month, the minutes revealed, with “some” arguing that it was an appropriate forward-looking strategy “that would help stabilize the labor market” after its recent slowdown.
“Kevin Hassett has to get appointed (as Fed chair) and then has to be very dovish” for the dollar’s slump to continue next year, Societe Generale strategist Kit Juckes said – and even then, it might also need Wall Street to buckle.
“I think the yen is the most difficult currency next year for everyone to get right,” he added.
“They really do have an underlying debt problem”, Juckes said, also highlighting how the normal correlation between the currency and bond yields looks to have now fallen apart.
Most big euro zone bond markets were closed on Wednesday. UK gilts, which were trading, were yielding 4.47% for the 10-year benchmark, while equivalent U.S. Treasury yields hovered just below 4.12% having dropped 45 basis points this year.
Back in the commodities markets, Brent oil was bobbing around $61 a barrel as traders did their final rounds for the year.
Its price has slid more than 17% in 2025 and is set for its third consecutive yearly drop against a backdrop of plentiful supply, trade tariffs and speculation around the future of U.S. sanctions on producers like Russia and Venezuela.
China’s leader Xi Jinping said on Wednesday its 140 trillion yuan ($20 trillion) economy was on track to meet its growth target of around 5% after what he described as an “extraordinary” year and promised more proactive policies in 2026.
Xi also struck a familiar tone on Taiwan, repeating last year’s warning to what Beijing regards as forces seeking Taiwan’s independence a day after China had staged massive military drills around the island.
A WORD ON THE STREET
Wall Street futures pointed to a low-key last session of the year in New York later too.
The S&P 500 and the Dow are set to close their eighth consecutive month in the green and an eighth in the last nine on the Nasdaq, bolstered by the frenzy around AI stocks that has pushed all three indexes to repeated record highs this year.
For the nit-pickers though, the performances haven’t been as spectacular as the last two years, with some pointing the finger at Trump’s “Liberation Day” tariffs launched back in April and the knock-on effect on confidence and the dollar.
On paper, the ongoing AI euphoria – which includes a more than 65% jump and best year since 2009 for Alphabet’s shares – means the S&P 500 will just pip the European STOXX 600, with 17% vs 16.5% in headline gains this year.
However, the greenback’s weakness means that in dollar ‘total returns’ terms, the STOXX 600 is well ahead at 37%, Japan’s Nikkei is up nearly 30% while South Korea’s KOPSI tops the lot with an almost 100% return.
-Reuters
