As markets price in a more aggressive Fed rate-hike path and U.S. Treasury yields keep climbing, gold faces clear near-term pressure. The price could even fall toward $4000 per ounce within the next week. Still, Aakash Doshi, Head of Gold Strategy at State Street Investment Management, believes this level will likely act as support. Although the road higher has become tougher, gold still has a chance to hit $5000 within six months.
In an interview, Doshi said the recent gold pullback is not surprising, as markets have repriced two additional rate hikes since mid-August, and longer-dated rate expectations have shifted markedly. In his view, gold is now reacting to a peak in market hawkish sentiment. Higher nominal and real yields, plus a stronger U.S. dollar, are weighing on the precious metal.
Nevertheless, Doshi stressed that this correction has not materially altered gold’s long-term structural outlook. He noted that several more Fed hikes would create tactical headwinds for gold, since elevated real yields will make the journey toward $5000 more challenging.
Why Rising Yields May Not Break Gold
Doshi argues higher interest rates cannot resolve the long-term fiscal issues facing the United States and other major economies. Instead, they will add pressure by lifting debt servicing costs for governments. That is one reason gold has remained fairly resilient even amid drastic repricing in global bond markets.
He mentioned that before the COVID-19 pandemic, the 10-year U.S. Treasury yield stood around 1.5%. Few would have believed back then that six and a half years later, the 10-year yield would near 5.3% while gold still hovered close to $4000 an ounce. Doshi says this divergence shows structural forces matter just as much as the traditional gold-rate relationship.
State Street’s September monthly gold report notes the reason yields are rising also matters. Due to fiscal imbalances, peRSIstent inflation risks and geopolitical uncertainty, long-term term premiums in the U.S., UK, France and Germany have climbed to their highest levels since 2011. U.S. public debt topped $40 trillion in August, with the latest $1 trillion increase taking roughly five months.
Fiscal Pressures and Safe-Haven Demand Underpin Gold
Doshi states the rise in term premiums is driven by three factors: concerns over institutional credibility, peRSIstent inflation, and fiscal imbalances paired with growing U.S. Treasury supply. Meanwhile, physical and investment demand from China continues to provide underlying support for gold prices.
State Street said China’s non-monetary gold imports hit a record 1000 tonnes in the first seven months of 2026, up 78% year-on-year, even though local gold prices averaged roughly 45% higher than a year ago. This indicates demand has not faded meaningfully despite the sharp price increase.
Doshi also points out Western investors kept adding gold holdings during the price pullback. He says September gold ETF inflows show strategic investors still view gold as a hedge against macro policy uncertainty and fiat currency risks.
This trend follows a strong rebound in Western investment demand in August. Global gold ETFs attracted $17.1 billion in inflows that month, with U.S.-listed funds recording $7.9 billion in net inflows, the strongest monthly reading since September 2025.
Options Market Remains Bullish-Tilted
Doshi adds the positioning structure in gold options markets also supports the case for further price gains. Longer-dated volatility skew remains relatively bullish, and investor demand for upside exposure is stronger. State Street noted in its September report that gold derivative flows have shifted from bearish option dominance toward bullish options, and the premium of bullish options relative to bearish options has risen.
Gold is caught in a classic tug-of-war between near-term headwinds from rising yields and a stronger dollar, and long-term support from fiscal deficits, inflation and safe-haven demand. Markets will keep watching the Fed policy path, the pace of U.S. debt expansion and global ETF fund flows. These factors will decide whether gold first tests support at $4000 or renews its push toward $5000.