Gold Prices May Fall to $4,000 Amid Rising Bond Yields, But Target Remains High

Rising bond yields may push gold prices back to $4,000 an ounce, but State Street's Doshi still sees a target of $5,000 by Q2 2027.

Aakash Doshi, Head of Gold Strategy at State Street Investment Management, said the current correction in gold is not surprising given the dramatic shift in interest rate expectations. Markets have priced in two additional rate hikes since mid-August, and higher nominal and real yields are weighing on the precious metal.

However, Doshi noted that the current correction has not materially altered gold's longer-term structural outlook. He pointed out that higher rates do not solve the underlying fiscal problems facing major economies, including the United States.

Doshi also highlighted the importance of structural forces beyond gold's traditional relationship with interest rates. The U.S. 10-year Treasury yield was around 1.5% before the COVID-19 pandemic, but it has since risen to over 5.3%, while gold remains near $4,000 an ounce.