Gold’s sharp pullback last week rattled markets and fueled speculation that the precious metal’s historic rally had finally run its course.
Yet, veteran economist Ed Yardeni says the selloff doesn’t change the bigger picture — and his $6,000 gold target by the end of 2026 remains intact.
In his latest morning briefing, Yardeni challenged the prevailing narrative that the selloff was sparked by President Donald Trump‘s nomination of Kevin Warsh as the next Federal Reserve chair. In his view, the timing simply doesn’t line up.
“I’m still sticking with my 6,000 by the end of the year,” Yardeni said.
“At the end of the decade… I think 10,000 is reasonable,” he added.
Gold Was Already Falling Before The Fed News
Yardeni highlighted that gold prices – as tracked by the SPDR Gold Shares (NYSE:GLD) – were already falling Thursday night — well before Warsh’s name was formally announced on Friday.
“I was watching it the night before,” Yardeni said, noting that gold had already declined by hundreds of dollars at one point.
That sequence, he argued, suggests markets were reacting to diminishing uncertainty rather than suddenly reassessing monetary policy.
Several geopolitical risks that had been supporting precious metals appeared to be moderating at the same time, including reports that Iran was open to negotiations and signs that the administration was attempting to cool other global flashpoints.
Margin Calls Were The Real Trigger
While headlines focused on Warsh’s perceived hawkishness, Yardeni indicated a far more tangible catalyst: leverage.
On Friday afternoon, CME Group raised margin requirements on gold, silver, and other metals futures due to extreme volatility. That move forced traders to either post additional capital or unwind positions.
According to Yardeni, the sharp acceleration lower came after a more mechanical trigger.
“That meant a lot of the leverage that we get in the precious metals futures markets had to consider whether it wanted to remain leveraged and make margin calls or cash in the chips,” Yardeni said.
“So there’s a lot of cashing in of the chips going on.”
Silver’s collapse was especially severe, which Yardeni attributed to thinner liquidity and greater leverage compared to gold — conditions that amplify forced selling once margin calls hit.
Warsh Isn’t A One-Note Hawk
Yardeni acknowledged that Warsh built a reputation as a hawk during the financial crisis, opposing zero interest rates and later rounds of quantitative easing. But he cautioned against freezing that view in time.
When examining Warsh’s more recent comments, Yardeni said the picture looks very different. Warsh has increasingly emphasized supply-side growth, productivity gains, and the deflationary potential of technological advances — especially artificial intelligence.
“He sounds much more like a supply-sider today,” Yardeni said. “That’s a very different framework than the one people remember from 2009.”
Importantly, Yardeni also reminded investors that Fed chairs are consensus builders. Even strong personalities tend to moderate their views once they sit at the head of the Federal Open Market Committee.
“We’ve never really had a Fed chair who was a lone dissenter,” he said. “They lead by persuasion, not by force.”
Why $6,000 Still Makes Sense
Yardeni’s gold outlook isn’t driven by a single macro fear. He readily admits he doesn’t have a traditional valuation model for gold — just as he doesn’t for Bitcoin (CRYPTO: BTC).
Instead, he frames gold as a portfolio stabilizer.
By plotting gold and the S&P 500 on the same chart using the same scale, Yardeni observes that the two tend to move inversely on a cyclical basis, even if their long-term trends align.
“That corroborates that gold is a good diversifier for a portfolio if you want to take some of the volatility out of the portfolio,” he said.
As equity markets rise, Yardeni believes diversification demand alone can support higher gold prices.
“As the stock market goes higher and higher, people feel a little bit less comfortable with it,” he said. “They don’t want to give it back.”
If the S&P 500 continues climbing toward 10,000 later this decade, Yardeni believes that diversification alone could push gold toward $10,000 as well — even without a recession or inflation shock.
The Bottom Line
In Yardeni’s view, last week’s precious-metals crash was a classic leverage unwind — not a verdict on monetary policy, Warsh, or the long-term gold story.
Volatility, he said, comes with meltups.
But for now, his message is clear: gold’s bull case is bruised, not broken — and $6,000 is still very much on the table.
Photo: Shutterstock
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