HSBC Cuts Near-Term Gold Forecasts, Cites Long-Term Fiscal and Geopolitical Risks

HSBC has trimmed its gold price forecasts for 2026 and 2027 following a significant retreat from record highs, but the bank stated it expects the bullion's rally to resume, underpinned by structural fiscal and geopolitical risks.

Near-Term Headwinds Prompt Downgrade

The bank adjusted its average gold price forecast for 2026 down to $4,560 per ounce from a previous estimate of $4,864. For 2027, the average price forecast was lowered to $4,925 from $5,000. HSBC also established a 2026 year-end price target of $4,750 and a 2027 target of $5,025.

This revision follows a sharp pullback in the gold price. After hitting a record high of $5,450 an ounce on January 30, the precious metal fell to a 2026 low of $3,942 on June 30, according to the report. The price pressure was attributed to a hawkish policy stance from new Federal Reserve Chair Kevin Warsh, which strengthened the U.S. dollar, and earlier declines linked to the Iran conflict that drove up oil prices and bond yields.

Structural Bull Case Remains Intact

Despite the short-term downgrade, HSBC's chief precious metals analyst, James Steel, said he retains "a positive posture" on gold. The bank's long-term forecasts for 2028 and 2029 remain unchanged at $5,200 and $5,300, respectively.

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Steel argues that underlying economic and political issues will continue to support gold as a safe-haven asset. "Ongoing fiscal profligacy, in many countries, but notably the U.S. (aggravated by the war) and economic uncertainty can revive gold’s safe haven status," the analyst wrote. He added that elevated geopolitical risks are likely to spur further gold buying.

Shifting Demand Dynamics

Central bank purchasing is expected to remain a key catalyst for gold. While official sector buying moderated to 863 tonnes in 2025 from nearly 1,100 tonnes annually in 2022-2024, HSBC anticipates this demand will recover later in the year. The bank kept its central bank demand forecasts at 680 tonnes for 2026 and 850 tonnes for 2027.

On the consumer side, high prices are eroding jewelry demand, with HSBC cutting its 2026 forecast to 1,377 tonnes. However, demand for gold bars has remained strong, particularly from institutional investors in Asia. While a firm U.S. dollar may cap the extent of a rally, HSBC noted that heavy selling in gold-backed ETFs could partially reverse as long-term structural factors reassert themselves.