The ongoing rally in gold is being driven by a broader “geopolitical risk-on trade,” Yardeni Research says, with rising global tensions fueling sharp gains across precious metals, base metals, and rare earth minerals.

The market research firm said it has been calling for a meltup in gold since early last year, a move that has now expanded 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 in a note.

“This is all happening because rising geopolitical tensions are driving a military arms race, and defense companies need metals to increase their output; their stock prices are soaring as well,” it added. 

Metals prices are also getting a lift from the geopolitical AI arms race, which is driving a surge in capital spending across technology, Yardeni said. 

The sector received another boost earlier this month when U.S. President Donald Trump proposed lifting U.S. military spending to $1.5 trillion in 2027 from $906 billion this year, citing what he called “troubled and dangerous times.”

The push follows a series of geopolitical moves, including U.S. actions in Venezuela, negotiations over American military bases in Greenland, and heightened military presence near Iran.

The surge in metals has extended across commodities markets. Yardeni highlighted that prices of tin, silver, platinum, palladium, and gold have all outperformed the broader S&P GSCI commodity spot index so far this year, while base metals exchange-traded funds (ETFs) continue to track rising industrial metals prices closely.

Yardeni said one of the emerging markets ETFs shows a strong correlation with the CRB raw industrials spot price index and has typically moved ahead of it. The firm said it began recommending an overweight to emerging markets in December last year, viewing recent performance as a signal that commodity prices are likely to keep climbing.

Against that backdrop, Yardeni maintained its bullish long-term outlook for gold. “We are still targeting $6,000 by the end of this year and $10,000 by the end of 2029,” the firm said.