(Kitco News) - Gold has surged to record highs above $3,500 an ounce, and the rally still has room to run as global uncertainty continues to drive demand, according to Aakash Doshi, Head of Gold Strategy at State Street Investment Management.
In an interview with Kitco News, Doshi said that with gold’s current momentum and trajectory, he sees a 50/50 chance that prices will hit $3,700 an ounce by the end of the month.
He added that there might not be enough time for gold to reach $4,000 an ounce by year-end, but it remains a viable target within the first half of 2026.
Doshi said he is monitoring an important shift in the gold marketplace as dominant central bank demand is finally being replaced by investment demand. He noted that economic uncertainty and the growing threat of stagflation have increased demand for liquid alternative assets like gold, and this will be reflected in gold-backed exchange-traded funds (ETF).
“ I would say that 2025 is the year of gold ETFs,” he said. “ Financial flows are catching up to what has been a strong physical gold environment for the last several years.”
The first half of the year saw the largest investment flows into gold-backed ETFs since 2020. At the same time, holdings remain well below the record levels set five years ago.
Doshi explained that not only has investment demand picked up, but it has coincided with prices consolidating at elevated levels. He added that this demand is not surprising given the current environment of slowing growth, rising inflation, and elevated government debt.
“ US exceptionalism is once again on the back foot. The purchasing power of the U.S. dollar is weakening,” he said. “ We now have the Fed trying to defend growth, but it is also worried about inflation. This is creating a bull steepening of the Treasury curve. Short-end rates are falling, but back-end, long-dated rates are anchored because of this inflation impulse and the fiscal debt in the US. This is a perfect storm for gold.”
Although gold has hit all-time highs 26 times this year and continues to hold support above $3,500 an ounce, Doshi said its value is still relative. While gold doesn’t provide a yield, he pointed out that its low volatility and low correlation to other assets make it an attractive diversification tool.
With equity markets trading near all-time highs, Doshi said that even above $3,500 an ounce, there is value in holding gold.
“ There's a wide mode of probabilities out there,” he said. “The dispersion risk, as I like to put it, is high. That includes stagflation, a possible recession, and an inflation shock. Gold is just going to benefit from this high level of uncertainty.”
“Over the medium to long term, we expect higher gold prices,” Doshi added. “ Tactically, in the short term, there's always a risk of a pullback, but I see that as a better level to buy. We're still in an environment where many of these factors related to the Fed, the dollar, equity valuations, and tariff policies are still playing out. It's not like we've fully finished the cycle.”
