Published January 23, 2026
Over the past couple of years, the gold trade has been, well, absolutely golden. One reason for the meteoric rise of the precious metal has been a shift in attitude toward U.S. Treasury bonds. This week’s market action provided yet another example of the multiple forces pushes investors (and central banks) into buying more and more gold. As the report below shows, this “safe haven” buying is occurring despite a ramp in economic growth that appears to be global in nature (witness the rallies in international stock markets generally).
Here is Delta Research’s summary of the week’s impacts:
“Greenland-related headlines moved quickly this week, knocking the market down by ~2% on Tuesday and lifting it roughly 1.7% on Wednesday and Thursday – though stronger economic news also aided the rebound.
At the start of the week, President Trump proposed new tariffs for countries opposing a U.S. acquisition of Greenland. Eight NATO members including the UK, Germany, and France, would face a 10% tariff effective February 1, rising to 25% on June 1 if a deal is not reached.
Investors worried about retaliatory actions by the European Union (EU), higher U.S. inflation, and additional shifts by Europe, Canada and Mexico to diversify trade away from the US. Even before the Greenland headlines, Canada and China signed a trade deal last week as Canada seeks to diversify away from its reliance on US trade (about 70% of its exports) and China looks to further broaden its reach. While the market impact for the US will not be immediate, this may hurt future US GDP growth.
Historically, during “risk-off” periods institutional investors flocked to U.S. treasuries. On Tuesday, however, 10-year Treasury yields rose (and prices fell) as inflation concerns increased and international investors diversified away from U.S. debt. To diversify away from the dollar, investors bought gold – a trade that has picked up steam. Gold is up 14% year-to-date and ~88% over the past year. Since October 2022, a troy ounce of gold has appreciated ~190% – roughly 2x the S&P 500’s 93% gain over the same period.
Interestingly, Bitcoin, sometimes called “digital gold” and proxied by ETFs IBIT and FBTC fell ~6% on Tuesday amid geopolitical uncertainty. Bitcoin appears to be driven more by risk sentiment than by the dollar-diversification trade.
On Wednesday, the tariff proposal was pulled back. President Trump said: “Based upon a very productive meeting that I have had with the Secretary General of NATO, Mark Rutte, we have formed the framework of a future deal with respect to Greenland.” He added that the US will not impose the tariffs scheduled to take effect on February 1.
Away from the Greenland headlines, US growth is accelerating and the Federal Reserve is increasing liquidity. The most recent ISM Services Index reading of 54.4 was the highest in over a year. Jobless claims fell to 198,000 reflecting a healthy labor market. Approximately $100 billion is expected to flow back to households via tax refunds over the next three months which support above trend growth. The Atlanta Fed’s nowcast for Q4 GDP growth is now 5.4%, up from 5.3% a week ago – consensus is 1%. Growth is the primary driver of equity returns.
Market Update
President Trump’s threat to impose higher tariffs on European countries sent stocks lower Tuesday after markets were closed for Monday’s MLK Day holiday. All the major indexes fell -2%. Of note, rather than falling as they normally would during a market flight to safety, U.S. Treasury bond yields ticked upward perhaps in response to a big selloff in Japanese debt. Precious metals continued to be the favored safe haven for investors Monday with gold and silver prices surging yet again. Stocks recovered half their loss in Wednesday’s trade with Trump announcing a deal “framework” with the Europeans. The recovery continued Thursday with stocks posting a +0.9% lift. Third quarter GDP came in strong at 4.4% to continue providing tailwind to cyclical stock sectors. Friday brought a mixed market with small caps hit hard. The group has been the leading index so far in 2026. A negative reversal in regional banks was a factor in Friday’s selling. President Trump’s idea of a 10% cap on credit card rates combined with an Administration lawsuit against JP Morgan weighed on banks Friday. Shares of semiconductor maker Intel were hammered Friday when earnings failed to live up to rosy expectations.
Stocks posted a second straight losing week but only modestly so. The S&P 500 (SPY) slipped -0.35%. The Nasdaq 100 (QQQ) posted a slim +0.23% gain. Small cap stocks (IWM) suffered a -0.36% dip after Friday’s almost -2% slide.
Warm wishes and until next week.