Although gold prices are facing some short-term pressure as high oil prices continue to drive inflation and lead to expectations of rising interest rates, a large investment institution believes that this precious metal is still likely to surpass the 5,000 USD per ounce mark by the end of the year.
Commodity experts at State Street Investment Management Company led by Mr. Aakash Doshi, said they still maintain a positive outlook on gold and assess that there is about 50% chance of prices fluctuating in the 4,750 – 5,500 USD per ounce range for the rest of the year.
However, this organization also partially reduced expectations of a strong increase. The probability scenario of gold prices reaching the 5,500 – 6,250 USD per ounce range is reduced from 35% to 30%. At the same time, the analysis team believes that the 4,000 – 4,100 USD per ounce range will play a solid supporting role for the market, and the possibility of resetting the historical peak may occur in 2027. A more negative scenario, with prices fluctuating in the range of 4,000 – 4,750 USD per ounce, is assessed to have a probability of about 20%.
According to experts, the price drop in the previous month and the current sideways phase of gold are not unexpected developments, in the context of strong global market sentiment due to conflicts between the US, Israel and Iran.
At the beginning of the year, the market once expected the US Federal Reserve (Fed) to cut interest rates by about 0.58 percentage points this year. However, fluctuations in the Middle East, especially disruptions to the energy supply chain, have significantly reversed this expectation. Even in mid- and late March, at times the market bet on the possibility of interest rates increasing by more than 60%.
Currently, the market leans towards the possibility of interest rates being kept unchanged until the end of the year. However, gold prices still show relative stability when maintaining below the 4,800 USD per ounce mark, with the nearest trading level around 4,774 USD per ounce, up more than 1% in the day.
Despite many short-term obstacles, experts believe that investors should focus on long-term trends instead of paying too much attention to interest rate fluctuations in the short term.
According to analysis, the adjustment in March mainly stemmed from the market's revaluation of monetary policy and the increase in real yields, thereby supporting the strengthening of the USD, not due to the weakening of global gold demand. Structural factors such as concerns about currency devaluation and the trend of allocating alternative assets are still supporting gold.
Notably, high oil prices are both a pressure factor and can support gold in the long term. If the conflict lasts and pushes oil prices above $150 per barrel, gold may be negatively affected through the interest rate and USD channels. However, this scenario also increases the risk of recession or stagnation, thereby potentially boosting demand for gold.
Conversely, if oil prices return to the 80-85 USD per barrel range, gold prices may quickly return above the 5,000 USD per ounce mark.
Besides the monetary policy factor, experts also emphasize that the trend of increasing global public debt is an important long-term driving force for gold. According to estimates by the US Congressional Budget Office, US government interest expenses could exceed 1,000 billion USD this year - for the first time in history.
Globally, total debt has reached approximately $340,000 trillion, equivalent to 3-4 times the world's economic size, with strong growth mainly coming from the government sector. This reflects increasing fiscal pressure and long-term currency devaluation risks, factors that often drive demand for gold.
