If Stocks Are at Highs, Why Are Precious Metals Winning? Here’s What to Watch

Happy Holidays!
Year-end strength continues, but 2026 is shaping up to be a market of dispersion. This week, we focus on where leadership is emerging — and where it’s fading.

Data is provided by Google Finance & Seeking Alpha
*Stock data as of market close, cryptocurrency and gold data as of Friday 6:00pm ET

This week reflected a classic Santa Rally, with U.S. equities grinding higher in a holiday-shortened trading week. The S&P 500 gained 1.01%, while the Nasdaq rose 0.78%, supported by easing Treasury yields and light liquidity that favored risk assets. The Dow Jones also advanced 1.00%, signaling broad-based participation rather than narrow leadership.

In rates, the 10-year Treasury yield fell to 4.14%, reinforcing expectations that monetary policy will remain supportive into early 2026. Volatility compressed sharply, with the CBOE Volatility Index (VIX) dropping over 10%, underscoring investor complacency typical of year-end rallies.

Outside equities, gold surged 4.36%, extending its strong momentum as investors continued to hedge with safe-haven assets even amid a risk-on backdrop. Bitcoin slipped 0.71%, suggesting that the rally was driven more by traditional equities and rates rather than speculative excess.

This week’s sector performance leaned risk-on, with leadership firmly in mega-cap tech, semiconductors, and communication services, while defensive sectors lagged as volatility compressed during the Santa Rally.

Technology led the market, driven by strong gains in semiconductors, with NVIDIA, Broadcom, and TSMC standing out on continued AI momentum. Mega-cap software was steadier, with Microsoft and Apple posting modest gains. Communication Services also outperformed, led by Alphabet, while Amazon outpaced other consumer-facing names.

Financials moved higher alongside improving risk appetite, supported by strength in large banks and capital markets firms. In contrast, Consumer Defensive and Utilities lagged as investors rotated away from safety, while Energy and Materials were mixed despite strong underlying commodity prices.

Overall, the snapshot reflects broad participation with clear leadership in growth and AI-linked sectors, a typical year-end setup as the Santa Rally carries into the final trading days of the year.

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As we approach the end of the year and look ahead to 2026, it’s worth stepping back to reflect on the trades, decisions, and strategies we’ve executed throughout 2025. The goal isn’t to judge outcomes alone, but to understand why certain decisions worked — and where we can improve. Markets have a way of rewarding process over short-term results, especially over longer horizons.

One key lesson I’ve learned this year is that investing is always a relative game. Every decision is made in comparison to something else. Buying more technology implicitly means owning less gold. Being bullish on Stock X often means being underweight — or avoiding — Stock Y, its closest competitor. Capital is finite, and allocation is always a trade-off.

This framing matters even more heading into 2026. The next year is unlikely to be about simple, linear up or down moves across the entire market. Instead, it will be a game of relatives — a game of outperformance, positioning, and focus. Some sectors will win while others lag, even if headline indexes grind higher.

Staying disciplined, revisiting assumptions, and remaining focused on relative value — rather than absolute predictions — will matter far more than trying to time every market swing. In a market defined by dispersion, the edge comes from knowing what to own, what not to own, and why.

Last week’s Result:
What’s your current outlook on AI stocks?
Most popular answer: Somewhat Bullish, but wary (73%)

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Disclaimer: The information provided in this newsletter is for educational and informational purposes only and should not be construed as investment advice. I am not a licensed financial advisor, and the opinions expressed here are based on my personal research and portfolio decisions. Investing in securities involves risk, including the potential loss of principal. Past performance is not indicative of future results. Always do your own research or consult with a licensed financial professional before making investment decisions.