Gold prices have been the talk of the town since 2022, after the US imposed sanctions on Russia. In the last five years, the XAU/USD index went from $1,500 to $4,600, recording an impressive rally. The price still remains bullish despite the robust performance and is now looking to climb above the $5,000 mark. Though it entered multiple correction phases over the years, it quickly bounced back, reclaiming lost territory.
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Why US National Debt Can Help Gold Prices Surge
On the heels of the bullish momentum, a bearish stance has hit the market, and it is the $40 trillion US National debt. John LaForge, Chief Alternative Strategist at Ned Davis Research, said to KitcoNews that if the US National debt is not brought under control, gold prices will find room to surge beyond the $10,000 mark. He even went ahead and claimed that 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,” LaForge said. Gold has been among the top-performing commodities, with prices rising every quarter.
He revealed that central banks’ fixation with gold is yet to cool down. In addition, 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. This is the reason why gold prices could double or triple next, he summed it up.