Yardeni Research attributes the recent surge in metals prices to what it describes as a wider "geopolitical risk-on trade," where escalating international tensions are lifting prices across precious metals, base metals and rare earth minerals.
In a note, the market research firm said it had anticipated a meltup in gold since early last year, and that the advance has broadened well beyond bullion. "It has turned into a meltup in the prices of all precious metals, many base metals, and rare earth minerals," Yardeni wrote. The firm added that the trend is being driven in part by a military arms race that is raising demand for metals as defense companies expand production, and that the stock prices of those defense firms are rising as a result.
Yardeni also highlighted the role of an AI-related geopolitical arms race in bolstering metals, saying the technological competition is prompting a surge in capital spending across technology sectors - a development that, in the firm's view, supports higher metals prices.
The note singled out a policy proposal as an additional catalyst. Earlier this month, U.S. President Donald Trump proposed lifting U.S. military spending to $1.5 trillion in 2027 from $906 billion this year, describing the world as "troubled and dangerous times." Yardeni cited that push alongside a series of geopolitical actions, including U.S. steps in Venezuela, negotiations over American military bases in Greenland, and an increased military presence near Iran, as contributors to the metals rally.
Yardeni said the strength in metals has been evident across the commodities complex. It noted that, so far this year, prices of tin, silver, platinum, palladium and gold have all outperformed the broader S&P GSCI commodity spot index. The firm also pointed to base metals exchange-traded funds as closely tracking rising industrial metals prices.
The research house highlighted an emerging markets ETF that, in its analysis, shows a strong correlation with the CRB raw industrials spot price index and has typically moved ahead of that benchmark. Yardeni said it began recommending an overweight to emerging markets in December of last year, and views recent ETF performance as a signal that commodity prices are likely to continue climbing.
Maintaining a bullish long-term stance on gold, Yardeni reiterated its price targets: "We are still targeting $6,000 by the end of this year and $10,000 by the end of 2029," the firm said.
Context and market implications
The firm frames the current metals rally as the product of intersecting geopolitical and technological forces that together boost demand for a broad set of commodities. Defense industry demand and elevated capital spending in technology are presented as key demand drivers, while sector- and region-linked ETFs are described as useful indicators of broader commodity trends.
What Yardeni is watching
- Performance of precious metals and base metals relative to commodity benchmarks.
- Defense-related demand tied to military spending proposals and geopolitical activity.
- Emerging markets ETF behavior relative to the CRB raw industrials spot price index.