Gold’s powerful rally is being underpinned by what Yardeni Research describes as a broad-based “geopolitical risk-on trade,” with escalating global tensions pushing prices higher not just for gold, but across precious metals, base metals and rare earth elements.
The research firm said it has been forecasting a sharp upside move in gold since early last year, a call that has since widened into a much broader commodities surge. “It has turned into a meltup in the prices of all precious metals, many base metals, and rare earth minerals,” Yardeni wrote in a recent note.
According to the firm, the rally is closely linked to rising geopolitical stress and the resulting acceleration in global defense spending. “This is all happening because rising geopolitical tensions are driving a military arms race, and defense companies need metals to increase their output; their stock prices are soaring as well,” Yardeni added.
Yardeni also pointed to the role of an emerging AI-driven geopolitical arms race, which it says is fueling a wave of capital expenditure across the technology sector and adding further upward pressure on metals demand.
Momentum in the sector strengthened earlier this month after U.S. President Donald Trump proposed raising U.S. military spending to $1.5 trillion by 2027, up from $906 billion this year, citing what he described as “troubled and dangerous times.”
That proposal follows a series of high-profile geopolitical developments, including U.S. actions in Venezuela, talks surrounding American military bases in Greenland, and increased military activity near Iran.
The metals rally has been broad-based across commodity markets. Yardeni noted that tin, silver, platinum, palladium and gold have all outperformed the S&P GSCI commodity spot index so far this year. At the same time, exchange-traded funds focused on base metals continue to closely mirror rising industrial metals prices.
The firm also highlighted that one emerging markets ETF shows a strong correlation with the CRB raw industrials spot price index and has historically tended to move ahead of it. Yardeni said it began recommending an overweight position in emerging markets in December, interpreting the recent performance as a signal that commodity prices are likely to continue rising.
Against this backdrop, Yardeni reiterated its long-term bullish stance on gold prices. “We are still targeting $6,000 by the end of this year and $10,000 by the end of 2029,” the firm said.