Gold prices have rallied from $1,500 to $4,600 over the past five years, with the XAU/USD index now targeting $5,000. The $40 trillion US national debt is a key bearish factor that could drive gold above $10,000, according to John LaForge, Chief Alternative Strategist at Ned Davis Research. He stated that if debt is not controlled, gold could reach $12,000. Central banks, institutions, and retail investors continue accumulating the metal, providing a strong tailwind as lawmakers show little interest in reducing the debt.
Gold prices have been the talk of the town since 2022, after the US imposed sanctions on Russia. The XAU/USD index went from $1,500 to $4,600, recording an impressive rally.
The price remains bullish and is now looking to climb above the $5,000 mark. It entered multiple correction phases over the years but quickly bounced back.
On the heels of the bullish momentum, a bearish stance has hit the market in the form of the $40 trillion US national debt. John LaForge of Ned Davis Research said that if the US national debt is not brought under control, gold prices will have room to surge beyond $10,000.
He claimed the XAU/USD index could hit a high of $12,000. He stressed that this could be a reality if the government fails to control the increasing debt.
“The longer we let it go, and we don’t pay this stuff back, and we keep piling all these debts up, the higher gold prices can go,” he said. “I think we can still see multiple years of higher prices because I don’t get the sense at all that, globally, politicians and leaders want to deal with it.”
Gold has been among the top-performing commodities, with prices rising every quarter. LaForge revealed that central banks’ fixation with gold is yet to cool down.
Institutional funds and retail investors have also been heavily accumulating the metal. This powers up gold prices further, at a time when the US national debt is rising.
“This is the biggest tailwind gold has had,” said LaForge. He explained that very few lawmakers are concerned about reducing the US national debt, which is why gold prices could double or triple next.
