HSBC Raises Gold Price Forecasts Due to Geopolitical Risks and Monetary Easing
In a recent update, HSBC has increased its average gold price predictions, citing a combination of geopolitical risks, expectations of continued monetary easing, and fiscal imbalances as key drivers. The bank highlights that gold prices hit a record high of $2,865 per ounce in late September, driven by safe-haven demand and hedge fund activity. In response to this surge, HSBC has revised its average price forecasts upward for multiple timeframes.
For 2024, HSBC now forecasts an average price of $2,395 per ounce, up from $2,305 previously. The bank has also significantly adjusted its 2025 forecast to $2,625 per ounce, up from $2,105. In addition, the 2026 forecast has been raised to $2,515 per ounce from $2,025, and the long-term outlook now stands at $2,200 per ounce, up from $2,000.
HSBC's optimistic outlook is influenced by ongoing geopolitical tensions, economic uncertainty, and growing fiscal deficits, all of which have increased demand for gold as a safe-haven asset. However, the bank's analysts caution that further rate cuts in the monetary policy easing cycle may offer diminishing support. While ETFs are reducing their positions, OTC and real money purchases remain strong.
Despite the positive factors supporting gold prices, HSBC acknowledges potential challenges ahead. A stronger U.S. dollar, driven by economic strength and possible rate cuts in other economies, could cap gold's upside potential. Additionally, central bank demand is expected to plateau unless there is a significant price correction.
Looking ahead, HSBC anticipates gold to trade in a range of $2,350 to $2,950 per ounce through 2025, with year-end targets of $2,725 for 2024 and $2,575 for 2025.
Analysis:
For investors, HSBC's revised gold price forecasts indicate a bullish outlook for the precious metal due to geopolitical tensions, economic uncertainties, and fiscal deficits. This suggests that allocating a portion of their portfolio to gold may serve as a hedge against potential risks in the global economy. However, investors should also be mindful of the challenges posed by a strengthening U.S. dollar and potential moderation in central bank demand. Monitoring these factors can help investors make informed decisions regarding their gold investments.