HSBC expects gold to remain supported in the long term despite the sharp fluctuations it has experienced this year, driven by its strong reaction to geopolitical factors and the movement of the US dollar.
Gold prices have fluctuated considerably this year, rising to a record high of nearly $5,450 per ounce in January before falling to a low of around $4,405 in March. They have since rebounded and stabilized near $4,800 per ounce, reflecting the market's high sensitivity to economic and political news.
The bank's forecast indicates that the recent pressure on gold stems from the strength of the dollar and rising US yields, coupled with profit-taking, higher energy prices, declining stock markets, and the impact of tensions in the Middle East.
The report also notes that markets have reduced their expectations for a 25-basis-point US interest rate cut by the end of 2026, which has put additional pressure on the precious metal in the short term, given the inverse relationship between interest rates and gold.
Despite these challenges, the institution believes the long-term trend remains supportive for gold, driven by the prospect of a gradual decline in the US dollar, ongoing geopolitical risks, uncertainty surrounding economic policies, and continued demand from central banks worldwide.
Conversely, the report indicates that rising prices have begun to impact consumer demand for jewelry and gold coins, particularly in emerging markets. However, this has not yet been sufficient to weaken the overall upward trend, unless weak investment demand persists for an extended period.$BTC
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