Gold prices have another 50% upside through 2025 if inflation jumps again, market vet says

Gold could soar as high as $3,500 by the end of 2025, implying a nearly 50% upside for the precious metal, market vet Ed Yardeni predicted.

• Gold could soar as high as $3,500 an ounce by the end of next year, market vet Ed Yardeni predicted.
• That implies a nearly 50% upside for gold, if inflation surges to a second peak, Yardeni said.
• Other economists have warned of a second peak in inflation, thanks to price pressures lingering in the economy.

Gold prices could soar through the end of 2025 if inflation stages a comeback, according to market veteran Ed Yardeni. 

The Yardeni Research president predicted that gold prices could rise as high as $3,500 by the end of next year, implying as much as a 49% upside for the precious metal from Monday's price around $2,347. That's because inflation could follow the path it did in the 1970s, when prices began to spiral and gold went from $35 an ounce to a peak of $665 an ounce. 

"The price of gold is soaring in new high territory," Yardeni said in a note to clients on Sunday, referring to gold prices notching an all-time record in March. "Another wage-price spiral attributable to rising oil prices would be very reminiscent of the Great Inflation of the 1970s, when the price of gold soared. In this scenario, $3,000-$3,500 per ounce would be a realistic target for gold through 2025."

Consumer prices have cooled dramatically from their highs above 9% in 2022, with inflation rising 3.2% in February, but market commentators have warned of a potential resurgence of inflation thanks to supply-chain disruptions stemming from geopolitical conflicts and the strong US labor market. 

Inflationary pressures are also being exacerbated by the recent run-up in crude prices, with Brent crude rising past $90 a barrel last week as OPEC+ producers announced they would continue their output cuts.

If conflict in the Middle East escalates, oil prices could rise over $100 a barrel, Yardeni predicted. He estimated there was a 20% chance inflation could rise to a second peak, which would result in the bullish run-up for gold. 

Yardeni isn't the only forecaster who sees more upside for gold in the years ahead. Top economist David Rosenberg said he saw 30% upside for gold prices, thanks to the risk stemming from the Fed's expected rate cuts and rising geopolitical conflict.