Recently, in addition to the soaring US stock market, the trend of gold, investors' favorite safe haven, is also worth paying attention to: gold prices reached a historic high of $2328.7 per ounce last week.
Ed Yardeni, a long-term bull on Wall Street and president of investment consulting firm Yardeni Research, believes that this upward trend will continue, especially if inflation returns.
He predicts that by the end of next year, the price of gold may rise to a high of $3500, which means it will rise 49% from the price of around $2347 on Monday. He believes that inflation may repeat the mistakes of the 1970s, when prices began to spiral upwards, with gold prices soaring from $35 per ounce to a peak of $665 per ounce.
"The price of gold is soaring to a new high. Another wage price spiral caused by the rise in oil prices is easily reminiscent of the great inflation of the 1970s, when gold prices soared. In this situation, by 2025, gold prices will soar to $3000 to $3500 per ounce," he wrote in his latest report.
Since the Federal Reserve's significant interest rate cut, consumer prices have cooled significantly from their peak of over 9% in 2022, with inflation rising by 3.2% in February. However, market commentators warn that inflation may rise again due to geopolitical conflicts and supply chain disruptions caused by a strong US labor market.
The recent rise in crude oil prices has also intensified inflationary pressures. Last week, due to OPEC+oil producing countries announcing further production cuts, Brent crude oil prices rose to over $90 per barrel.
Yadini predicts that if the Middle East conflict escalates, oil prices may rise to over $100 per barrel. He estimates that there is a 20% chance that inflation will rise to the second peak, which will lead to a rise in gold prices.
In fact, Yadini is not the only forecaster who believes that gold will rise in the coming years. David Rosenberg, a top American economist and President of Rosenberg Research, previously believed that the rise in gold was not yet complete.
He predicts that as central banks around the world begin to cut interest rates, gold prices will rise by about 15%, with the maximum increase possibly reaching 30%.
"We have found that the downside risk of gold prices is limited, but there is a lot of room for improvement. The possibility of gold reaching $3000 per ounce is much greater than the possibility of falling back to $1500 per ounce," he wrote in his latest report, adding that if geopolitical tensions intensify, it will further push up gold prices.