In a recent article by American economist and current President of Yardeni Research, Ed Yardeni, it is predicted that the current record-breaking surge in gold prices may continue until the end of this decade, ultimately driving the prices of precious metals to $10,000 per ounce.
Yardeni’s forecast implies a 151% increase in gold prices over the next five years, which is even more aggressive than his extremely optimistic prediction for the S&P 500 index. He anticipates the index to soar by nearly 50% to 10,000 points by 2030.
The prediction of a continued strong upward trend in gold prices is supported by the following reasons provided by Yardeni:
1. Economic Uncertainty: Yardeni notes that in recent years, economic and geopolitical forces have disrupted existing patterns, prompting investors to flock to safe-haven assets such as gold.
He has cited several catalysts boosting the demand for gold in previous reports, including President Trump’s tariff policies, pressure on the Federal Reserve to cut interest rates, and the challenging reality of the Chinese property market crisis.
2. Central Banks’ Purchases: Referring to a client report he wrote in September, Yardeni mentioned that “central banks around the world continue to increase the proportion of gold in their international reserves, creating a ‘Gold Put,’ which supports our bullish view.”
In recent years, central banks globally have been actively buying gold, a key factor driving the recent surge in gold prices. According to the latest data from the World Gold Council, global central banks added 15 metric tons of gold to their reserves in August, with the largest buyers being Kazakhstan, Bulgaria, and El Salvador.
3. Continued Strength in Gold Prices: Yardeni points out that gold prices are already nearing his target price of $4,000 per ounce by the end of 2025. He refers to his company’s analysis this year, stating that “progress is going well,” and if the current pace is maintained, there is potential to surpass the $10,000 mark in the future.
On Monday, international gold prices broke through the $3,900 per ounce mark during early Asian trading, setting a new historical high.
Over the past year, faced with economic turmoil, weakening U.S. dollar, and the resurgence of potential risks like inflation, individual and institutional investors are showing an increasingly strong interest in gold as a hedge asset.
Gold prices have already risen by 48% this year, poised to achieve the best annual performance since the 1970s. The anticipation of gold prices hitting $4,000 per ounce in the global market continues to grow, with expectations for it to be realized by 2026.
Generally, a decrease in interest rates supports an increase in gold prices, while an increase in rates can lead to a decline in the price of gold, which earns no interest. Additionally, large sell-offs of gold by central banks and mining companies can also result in price decreases.
(Credit: Business Insider)