Nitesh Shah, head of European commodities and macroeconomic research at WisdomTree, said that even if the trade dispute is eventually resolved, the main risk to the U.S. economy is the independence of the Federal Reserve, as well as the credibility of the U.S. economy, and precious metals will retain their luster as global financial markets continue to face significant geopolitical and economic uncertainties. Based on his bullish modeling, Shah expects gold prices to reach $4,000 per ounce by the first quarter of 2026.
Gold's safe-haven appeal quickly faded after the ongoing trade war was announced to be on hold for 90 days. However, one market strategist expects that even if the trade dispute is eventually resolved, precious metals will retain their luster as global financial markets continue to face significant geopolitical and economic uncertainties.
Nitesh Shah, head of European commodities and macroeconomic research at WisdomTree, said that in addition to the uncertainty of global trade, he believes that the next major risk to the U.S. economy is the U.S. monetary policy and the independence of the Federal Reserve.
Fed Chairman Powell's monetary policy stance has received a lot of criticism from President Trump. The Fed has maintained a neutral policy this year, hesitating whether it should cut interest rates as inflation risks continue to rise amid relatively stable economic growth.
Last week, President Trump called Powell a "fool" after the Fed reiterated that it was in no hurry to ease monetary policy. Despite the ongoing conflict, Trump said he has no plans to fire Powell. Powell's term ends in May 2026. . .
Shah said gold could perform well if investors begin to question how much independence the Fed will have as Trump begins searching for Powell's successor. He noted that the market could lose confidence in the Fed as the Trump administration continues to pressure it to cut interest rates. .
He said: "If the Fed's independence starts to be questioned, its institutional strength is likely to weaken. Gold is likely to see a sharp rise because it is the antithesis of fiat currencies that can be manipulated by central banks. In this period of significant geopolitical and monetary policy uncertainty, demand for hard assets such as gold has increased."
While gold prices remain well below last month's all-time high of $3,500 an ounce, Shah said he expects it is only a matter of time before prices find new support and hit new records.
In his latest price forecast, his model shows a baseline forecast of $3,610 for the first quarter of 2026.
But he added that with so much uncertainty in financial markets, risks are tilted to the upside. Based on his bullish modeling, Shah expects gold prices to reach $4,000 an ounce by the first quarter of 2026.
"We certainly think speculative demand for gold should remain elevated as risks of recession and inflation rise," he wrote in his latest report. "It took 14 years for gold to go from $1,000 to $2,000, and just over a year to go from $2,000 to $3,000. It's not a stretch to think that adding another $1,000 to today's price would take it over $4,000."
In addition to the Fed's independence, the U.S. economy faces a serious credibility problem, Shah said. He noted that even if the global trade war is resolved, the U.S.'s reputation as a reliable trading partner has been damaged.
In his latest report, Shah also outlined another key bullish scenario, in which the U.S. government attempts to implement what experts call the Mar-a-Lago Accord. An economic paper published in November painted a scenario in which the U.S. dollar remains unchallenged as the world's reserve currency, bringing global economic stability while remaining undervalued to support domestic manufacturing and the economy.
Shah noted that the last time the U.S. government devalued the dollar to reduce the trade deficit was in 1985, when the Plaza Accord was signed. He noted that the dollar depreciated 48% between 1985 and 1987.
“In the Mar-a-Lago deal, we modeled a 20% depreciation, where inflation would rise faster than in our bull case scenario,” Shah said in his note. “For this scenario, we removed the explicit bond yield assumption as we believe yields could swing wildly in either direction. While the intent of the policy move is to reduce the cost of financing U.S. debt (and thus policymakers would like to see yields fall), debt refinancing could raise concerns about U.S. reliability and could push bond yields higher. Given these complications, we removed the explicit bond market assumption but assumed that gold would benefit from the turmoil in the bond market as it is a defensive option. We believe that sentiment for gold would strengthen substantially. As this scenario is well out of sample, we expect our $5,080 forecast to be conservative.”
While Shah continues to see upside potential for gold, he acknowledged some downside risks. However, he added that any price weakness is likely to be limited in the current environment.
In his bear case scenario, Shah sees gold prices falling to $2,700.
He said: "Looking at my scenarios, more scenarios highlight the upside risks to prices, and even if only one scenario goes down, it won't go down too much. Because there are so many uncertainties, I think investors need to be somewhat protected on the downside, and gold will need to be used as a strategic asset."
XAUUSD GOLD XAUUSD
Gold's safe-haven appeal quickly faded after the ongoing trade war was announced to be on hold for 90 days. However, one market strategist expects that even if the trade dispute is eventually resolved, precious metals will retain their luster as global financial markets continue to face significant geopolitical and economic uncertainties.
Nitesh Shah, head of European commodities and macroeconomic research at WisdomTree, said that in addition to the uncertainty of global trade, he believes that the next major risk to the U.S. economy is the U.S. monetary policy and the independence of the Federal Reserve.
Fed Chairman Powell's monetary policy stance has received a lot of criticism from President Trump. The Fed has maintained a neutral policy this year, hesitating whether it should cut interest rates as inflation risks continue to rise amid relatively stable economic growth.
Last week, President Trump called Powell a "fool" after the Fed reiterated that it was in no hurry to ease monetary policy. Despite the ongoing conflict, Trump said he has no plans to fire Powell. Powell's term ends in May 2026. . .
Shah said gold could perform well if investors begin to question how much independence the Fed will have as Trump begins searching for Powell's successor. He noted that the market could lose confidence in the Fed as the Trump administration continues to pressure it to cut interest rates. .
He said: "If the Fed's independence starts to be questioned, its institutional strength is likely to weaken. Gold is likely to see a sharp rise because it is the antithesis of fiat currencies that can be manipulated by central banks. In this period of significant geopolitical and monetary policy uncertainty, demand for hard assets such as gold has increased."
While gold prices remain well below last month's all-time high of $3,500 an ounce, Shah said he expects it is only a matter of time before prices find new support and hit new records.
In his latest price forecast, his model shows a baseline forecast of $3,610 for the first quarter of 2026.
But he added that with so much uncertainty in financial markets, risks are tilted to the upside. Based on his bullish modeling, Shah expects gold prices to reach $4,000 an ounce by the first quarter of 2026.
"We certainly think speculative demand for gold should remain elevated as risks of recession and inflation rise," he wrote in his latest report. "It took 14 years for gold to go from $1,000 to $2,000, and just over a year to go from $2,000 to $3,000. It's not a stretch to think that adding another $1,000 to today's price would take it over $4,000."
In addition to the Fed's independence, the U.S. economy faces a serious credibility problem, Shah said. He noted that even if the global trade war is resolved, the U.S.'s reputation as a reliable trading partner has been damaged.
In his latest report, Shah also outlined another key bullish scenario, in which the U.S. government attempts to implement what experts call the Mar-a-Lago Accord. An economic paper published in November painted a scenario in which the U.S. dollar remains unchallenged as the world's reserve currency, bringing global economic stability while remaining undervalued to support domestic manufacturing and the economy.
Shah noted that the last time the U.S. government devalued the dollar to reduce the trade deficit was in 1985, when the Plaza Accord was signed. He noted that the dollar depreciated 48% between 1985 and 1987.
“In the Mar-a-Lago deal, we modeled a 20% depreciation, where inflation would rise faster than in our bull case scenario,” Shah said in his note. “For this scenario, we removed the explicit bond yield assumption as we believe yields could swing wildly in either direction. While the intent of the policy move is to reduce the cost of financing U.S. debt (and thus policymakers would like to see yields fall), debt refinancing could raise concerns about U.S. reliability and could push bond yields higher. Given these complications, we removed the explicit bond market assumption but assumed that gold would benefit from the turmoil in the bond market as it is a defensive option. We believe that sentiment for gold would strengthen substantially. As this scenario is well out of sample, we expect our $5,080 forecast to be conservative.”
While Shah continues to see upside potential for gold, he acknowledged some downside risks. However, he added that any price weakness is likely to be limited in the current environment.
In his bear case scenario, Shah sees gold prices falling to $2,700.
He said: "Looking at my scenarios, more scenarios highlight the upside risks to prices, and even if only one scenario goes down, it won't go down too much. Because there are so many uncertainties, I think investors need to be somewhat protected on the downside, and gold will need to be used as a strategic asset."
XAUUSD GOLD XAUUSD 
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Continuously release precise trading plans to lead members to expand profits, with a stable profit of 988% every month. If you have not made a profit yet, then join us. t.me/fahsufnwks
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.