Gold prices have seen an impressive surge of nearly 50% so far this year, reaching an all-time high of over $4,000 per ounce earlier this week. The increase was further propelled by recent announcements from President Donald Trump regarding trade tariffs on China, causing a significant sell-off in the stock market and driving investors toward safer assets like gold. Following Trump’s declaration of an additional 100% tariff on China and restrictions on U.S. software exports, stocks experienced their worst losses since the peak of the trade conflict in April, coinciding with a decline in the U.S. dollar and a 1.5% jump in gold prices.
Market analyst Ed Yardeni, president of Yardeni Research, has been bullish on gold and has predicted that if the current pace persists, the price of gold could soar to $5,000 by 2026 and potentially reach $10,000 before the decade ends. Yardeni attributes gold’s rise to various factors, including its historical role as a hedge against inflation, the trend of central banks diversifying away from the dollar following sanctions against Russia, the deflating housing market in China, and ongoing geopolitical tensions exacerbated by the Trump administration’s policies.
Furthermore, the Federal Reserve’s recent pivot to rate cuts has also provided support for gold prices. With policymakers prioritizing concerns around a stagnant labor market over inflation control, the anticipation of further rate reductions has intensified worries about rising inflation. While the Fed has not committed to a drastic easing cycle, the combination of robust GDP growth and rising inflation fears has led to increased investor interest in gold.
The high levels of debt in major economies, including the U.S., have made investors wary of global currencies. This has initiated a “debasement trade,” pushing investors to favor precious metals and cryptocurrencies as they anticipate governments allowing higher inflation to alleviate debt burdens.
Capital Economics’ Hamad Hussain notes a trend of “FOMO” (fear of missing out) within the gold market that complicates objective valuation of the metal. Despite this speculative pressure, Hussain expresses a belief that gold prices are likely to continue their ascent, although he cautions that the rate of increase may eventually slow as prevailing supportive factors begin to weaken.
While the recent rally in gold occurred amid a backdrop of stable dollar values and increasing yields on inflation-protected bonds—a situation typically indicative of market exuberance—the consensus among analysts remains that, despite challenges, gold is poised for a promising future.
