13. April 2026
The gold price is currently in a field of tension that appears contradictory at first glance: On the one hand, high oil prices, rising inflation expectations, and a more challenging interest rate environment are weighing on the precious metal. On the other hand, major market participants continue to hold a positive long-term view. It is precisely this combination that makes the current situation so interesting. For although gold recently corrected and consolidated below the $4,800 per ounce mark, State Street Investment Management still sees a realistic path to prices above $5,000 by year-end.
At the heart of the current assessment is the question of whether the recent weakness in the gold price is merely an interim phase in an intact upward trend or indicates a fundamentally altered market structure. State Street Investment Management’s commodity analysts clearly lean towards the former interpretation. They remain positive on gold and see a 50% probability that the price will trade in a range between $4,750 and $5,500 per ounce for the remainder of the year.
At the same time, the firm has somewhat scaled back its particularly optimistic assessment. The probability for a bullish scenario with a trading range of $5,500 to $6,250 per ounce was reduced from 35% to 30%. Nevertheless, analysts assume that the market has a viable floor in the $4,000 to $4,100 range. Furthermore, they consider it possible that the previous all-time highs will be retested by 2027. They currently assign a 20% probability to the more bearish scenario of a range from $4,000 to $4,750, where trading closed at the end of March.
Gold Price Under Pressure from Oil, Inflation, and Interest Rate Expectations
State Street provides a clear explanation for the recent correction in the gold price. Analysts do not find the decline in March and the ongoing consolidation surprising, as sentiment in global financial markets has significantly shifted with the joint US-Israeli war against Iran. This particularly impacted interest rate expectations in the US.
At the beginning of the year, the market had anticipated interest rate cuts by the US Federal Reserve totaling 58 basis points for this year. However, the turmoil in the Middle East and the resulting supply chain problems in the energy sector massively shifted these expectations, it was stated. Between mid- and late March, the probability that the Fed might even raise interest rates this year temporarily exceeded 60%.
Meanwhile, the CME FedWatch Tool shows a 71% probability that interest rates will remain at their current level until year-end. This is a relevant burden for the gold price, as higher real yields and a more restrictive monetary policy increase the opportunity cost of holding a non-yielding asset like gold. Nevertheless, State Street assesses the current market reaction as comparatively robust.
State Street Sees Structural Drivers for Gold Remaining Intact
Despite the challenging short-term environment, State Street Investment Management advises against focusing too heavily on short-term interest rate movements. According to analysts, the correction in March was primarily a consequence of a reassessment of Fed policy and higher real yields, which in turn supported the US dollar. However, they do not see this as a break in the overarching demand thesis for gold.
This long-term thesis is based primarily on concerns about currency debasement and a greater allocation to alternative stores of value. Investors should therefore be cautious about pitting cyclical burdens, such as the temporarily increased opportunity costs of holding gold, against structural factors that, in the analysts’ opinion, continue to largely favor gold.
However, a central risk remains the oil price. State Street describes the situation as a double-edged sword. Should the conflict in the Middle East prolong and Brent crude prices rise above $150 per barrel, this could initially weigh on the gold price via the US dollar and the Fed. At the same time, such an energy shock would significantly increase the risk of a recession or stagflation. Conversely, a normalization of oil prices towards $80 to $85 per barrel could, according to analysts, lift gold relatively quickly back above the $5,000 per ounce mark.
Debt and Fiscal Risks Remain a Strong Argument for Gold
In addition to US monetary policy, State Street names another long-term driver for the gold price: the persistent rise in government debt. Citing estimates from the Congressional Budget Office, analysts expect net interest payments on US federal debt to exceed the $1 trillion mark for the first time this year. But the US is not alone with this problem.
Globally, debt has risen to a record $348 trillion, according to State Street. This corresponds to approximately three to four times the global gross domestic product. Debt growth was particularly strong in the government sector, not the private sector. For analysts, this points to deeply entrenched fiscal burdens that increase the risk of long-term currency debasement.
It is precisely in this environment that State Street sees gold’s strategic place. Rising deficits, higher war expenditures, growing interest burdens, and declining government revenues, according to this view, reinforce a macroeconomic backdrop that has historically often led to stronger gold demand. The bottom line is a market picture where short-term headwinds are real, but the structural forces favoring the precious metal remain intact.
