Chris Wood Predicts $10,000 Gold Price if US Suppresses Bond Yields

Jefferies' top equity strategist Chris Wood believes that gold could reach $10,000 an ounce if the US suppresses bond yields. This would weaken the dollar over the long run and create a tailwind for gold. Wood has been raising his long-term gold target for over 20 years, using a model that compares gold's price to US disposable income per capita.

He argues that if the US Federal Reserve and Treasury are forced into yield suppression, it would be equivalent to Japan's yield-control policy in recent years. This scenario would lead to a structurally weaker dollar, which is historically positive for gold. Wood has been tracking this trend and believes that gold could reach $10,000 an ounce, with his fuller model implying a target closer to $12,995.

Wood also warned about the risk of 'massive capital destruction' tied to the ongoing AI and semiconductor capex boom in the US. He believes that cheaper Chinese AI models could undercut the returns US hyperscalers are currently betting on, which would lead to a sharp reversal or implosion of the trade.

This scenario would send foreign institutional money back to Indian equities, as investors look for safer havens. Wood's comments provide insight into the potential impact of global market trends on Indian assets and household wealth.