Gold Price Forecast: $5,000 by Year-End

Gold's recent correction has not diminished its long-term appeal as an investment. Aakash Doshi, Head of Gold Strategy at State Street Investment Management, believes $5,000 per ounce by year-end is a realistic possibility.

The correction was not due to any lack of demand for gold, but rather the impact of rising interest rates and a stronger U.S. dollar on the debasement trade that drove gold to record highs earlier this year.

However, with the Federal Reserve's hawkish policy expectations unmet, labor market data softening, and the Treasury Department increasing long-term bond buybacks, gold has regained its momentum.

State Street's base-case range is now $4,750 to $6,500 an ounce by early next winter, with a target in the low-$5,000 area potentially sooner than expected. Doshi notes that a dovish shift from the Federal Reserve or another macroeconomic shock could bring $5,000 into play as soon as the fourth quarter.

The changing fiscal landscape and rising sovereign debt levels have created an environment that continues to support gold as a global monetary asset, particularly with investors now considering why yields are rising.