Gold Pulls Back as Stocks Rally and Central Bank Policy Outlook Shifts

Gold prices dipped on Thursday as global equities climbed sharply, reducing the metal’s appeal as a safe-haven asset for investors. Strong performance in stock markets often draws capital away from non-yielding assets like gold, and that dynamic was clearly visible this week.

Adding to the downward pressure, comments from several major central bankers signaled a cautious stance on monetary easing and hinted at tighter policy conditions in some economies. European Central Bank President Christine Lagarde emphasized the resilience of the eurozone economy, while Bank of England Governor Andrew Bailey suggested that further interest rate cuts may face stricter criteria ahead. These remarks weighed on precious metals more broadly.

Market expectations that the Bank of Japan could move to raise interest rates at its upcoming policy meeting also worked against gold prices, as higher yields tend to make non-interest-bearing assets less attractive.

On the other hand, gold found some support from the Bank of England’s recent decision to cut interest rates by 25 basis points, which helped reinforce its role as a store of value amid monetary uncertainty.

US economic data that fell short of forecasts—particularly the November Consumer Price Index and the December Philadelphia Federal Reserve business outlook—fueled speculation that the Federal Reserve may adopt a more accommodative stance, lending some backing to precious metals.

Geopolitical uncertainty continued to support safe-haven demand for gold, with ongoing tensions related to US tariffs and conflicts in Ukraine, the Middle East, and Venezuela reminding investors of the metal’s defensive qualities.

Looking ahead, expectations that the Federal Reserve could shift toward looser policy in 2026—especially if the incoming Fed leadership under President Donald Trump favors easier monetary conditions—are providing an additional tailwind for gold demand despite the near-term pullback.