By Myra P. Saefong
Gold at $5,000 is more likely than at $3,000, says State Street
Gold prices have declined since settling at a record high on Oct. 20, 2025.
Gold has seen a sharp selloff in the past week, and with the Federal Reserve expected to cut benchmark interest rates, investors could be missing an opportunity to buy the precious metal at a bargain price.
They may get another chance, with the central bank expected to make another cut before the year is done.
Pullbacks in prices are inevitable, but gold “remains well positioned for long-term growth,” said Ryan McIntyre, senior managing partner at Sprott Inc., an asset manager that focuses on precious metals and critical materials. “Global trust levels continue to erode, driving demand for assets that are independent of other assets and institutions.”
The precarious fiscal outlook in many Western economies, particularly the United States, with its high deficits and substantial federal debt, could also “support gold over the medium to long term as sovereign risk rises,” he told MarketWatch.
On Tuesday, the most-active December contract for gold futures (GCZ25) (GC00) settled at $3,983.10 an ounce on Comex, down 0.9% to mark a third straight session loss.
Prices have lost nearly 9% since settling at a record high of $4,359.40 on Oct. 20. Gold is still trading almost 3% higher so far this month and has gained nearly 51% year to date, according to Dow Jones Market Data.
Read: After gold’s big plunge, here’s what history shows could happen next
Aakash Doshi, global head of gold/metals strategy at State Street Investment Management, referred to gold’s recent decline as “temporary, with the potential floor of fresh buying around $3,600 to $3,650.”
The Fed on Wednesday is expected to cut its benchmark interest rate by 25 basis points, according to the CME Fed Watch Tool.
Read: How can the Fed be cutting interest rates again with inflation running so high?
The expected cut to rates despite still-elevated inflation data would keep “the pro-gold narrative in place,” said Stefan Gleason, president and chief executive offer at Money Metals Exchange. Lower rates can be supportive for non-interest-yielding gold.
“The world recognizes it is still overexposed to the U.S. dollar and underexposed to gold,” Gleason told MarketWatch. “As such, we expect the price of the yellow metal denominated in all fiat currencies to continue rising after working itself through the recent froth.”
Read: Gold’s record-breaking rally could keep running thanks to growing demand from this group of investors
The Fed last announced a reduction in interest rates on Sept. 17. That’s when it cut the federal-funds rate by 25 basis points to a range of 4% to 4.25%, marking the first reduction of 2025.
The day after that decision, gold finished lower and then traded mostly higher in the days that followed – climbing to a record $4,398 on Oct. 20, an all-time intraday high.
The Fed is expected to cut rates again before the end of this year, and “perhaps a bit in 2026,” which should enhance the appeal of gold, said State Street’s Doshi. At the same time, “most of the structural factors supporting gold – global fiscal debt loads, central bank buying, policy uncertainty, and elevated U.S. stock/bond correlations – remain intact for a left-tail hedge [against large losses] and diversification asset like gold.”
‘$5,000 is more likely than $3,000, and the gold market has rebased higher.’ Aakash Doshi, State Street Investment Management
Doshi thinks a rise in gold prices to $5,000 an ounce is more likely than a decline back to $3,000, and the “gold market has rebased higher.”
“Globally, but especially in the West, I would argue it is an underallocated liquid alternative asset,” he said.
For investors who are underallocated and have no exposure, Sprott’s McIntyre recommends they gradually build their position in gold over time. That approach helps avoid market timing, as “we view gold as a long-term strategic investment.”
He suggests that investors allocate 10% of their portfolio to physical gold as a strategic holding and to “periodically review and rebalance their allocation to ensure it does not drift significantly from the target level.”
More broadly, some strategists have suggested that gold holdings, including physical bullion and exchange-traded funds, should occupy between 5% and 20% of a portfolio.
-Myra P. Saefong
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10-28-25 1452ET
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