Gold Prices May Hit $4,000 Amid Rising Bond Yields, Says State Street's Doshi
Aakash Doshi from State Street predicts gold could reach $5,000 by mid-2027 despite current market challenges.
Gold prices could approach $4,000 an ounce within a week due to rising bond yields.
State Street's Aakash Doshi emphasizes a structural demand for gold despite tactical headwinds.
Chinese gold imports surged by 78% in early 2026, supporting global gold demand.
In light of increasing bond yields and expectations of higher interest rates, gold prices are projected to approach $4,000 per ounce within the next week. Aakash Doshi, Head of Gold Strategy at State Street Investment Management, forecasts that while the journey to this price point may be fraught with challenges, gold could still reach $5,000 by the second quarter of 2027.
Doshi explained that the current market dynamics are influenced by a more aggressive stance from the Federal Reserve and a strengthening U.S. dollar, which have created significant tactical challenges for gold. He noted that the recent selloff in gold prices is not unexpected, given the rapid adjustments in interest rate expectations, including two anticipated hikes since mid-August. Despite these pressures, Doshi believes that the long-term outlook for gold remains intact, as the market continues to exhibit a structural demand.
The strategist highlighted that the increase in interest rates does not resolve the underlying fiscal issues faced by the U.S. and other economies. Rising borrowing costs only exacerbate these challenges, increasing government debt servicing expenses. This situation may explain why gold has shown resilience despite the significant shifts in global bond markets. He pointed out that prior to the COVID-19 pandemic, the U.S. 10-year Treasury yield was around 1.5%, and now it stands at approximately 5.3%, yet gold remains near the $4,000 mark.
State Street's September gold report indicates that the reasons behind rising yields are crucial. Long-term term premia in major economies have reached their highest levels since 2011, driven by fiscal imbalances, persistent inflation risks, and geopolitical uncertainties. The U.S. public debt surpassed $40 trillion in August, with a trillion dollars added in just five months. Doshi identified three key factors driving these rising term premia: concerns about institutional credibility, ongoing inflation, and fiscal imbalances alongside increased Treasury supply.
Despite the challenges, demand for gold remains robust, particularly from China, where non-monetary gold imports reached a record 1,000 tonnes in the first seven months of 2026, a 78% increase from the previous year. Doshi noted that Western investors continue to allocate funds to gold, viewing it as a hedge against macroeconomic uncertainties. Inflows into gold-backed ETFs in September reached $17.1 billion globally, with U.S.-listed funds attracting $7.9 billion, marking their strongest month since September 2025. Additionally, the gold options market indicates bullish sentiment, with a shift from put-biased to call-biased derivatives, suggesting a growing demand for upward price exposure.
