The ongoing surge in gold prices is being fueled by a broader “geopolitical risk-on” trade, according to Yardeni Research, as rising global tensions drive strong gains across precious metals, base metals, and rare earth minerals.
The research firm said it has been forecasting a gold meltup since early last year, a move that has now spread well beyond bullion markets. What began as a rally in gold has evolved into a broad-based advance across precious metals, a range of industrial metals, and rare earth elements, Yardeni noted in a recent report.
According to the firm, escalating geopolitical risks are intensifying a global military buildup, boosting demand for metals as defense companies ramp up production. Shares of defense-related firms have also climbed sharply as a result. In parallel, the accelerating geopolitical AI arms race is driving a surge in capital investment across the technology sector, adding further support to metals prices.
The metals complex received another lift earlier this month after U.S. President Donald Trump proposed raising U.S. defense spending to $1.5 trillion in 2027, up from $906 billion this year. Trump cited what he described as increasingly “troubled and dangerous times” as justification for the expansion.
This proposal follows a series of geopolitical developments, including U.S. actions involving Venezuela, talks over American military bases in Greenland, and an increased military presence near Iran.
The strength in metals has been broad across commodity markets. Yardeni highlighted that tin, silver, platinum, palladium, and gold have all outperformed the broader S&P GSCI spot index so far this year. Base metals exchange-traded funds have also continued to closely track rising industrial metals prices.
Yardeni added that one emerging markets ETF shows a strong correlation with the CRB Raw Industrials Index and has historically moved ahead of it. The firm said it began recommending an overweight position in emerging markets in December, viewing recent performance as a signal that commodity prices are likely to continue rising.
Against this backdrop, Yardeni reaffirmed its long-term bullish outlook for gold. The firm said it continues to target a gold price of $6,000 by the end of this year and $10,000 by the end of 2029.
