HSBC strategists highlight this year’s sharp volatility, with prices swinging between about USD 4,405 and USD 5,450 per ounce before stabilising near USD 4,800. They see near-term price action as highly headline-driven, but expects a softer US Dollar (USD) and structural risks to support Gold over the longer term.

Volatility, geopolitics and structural supports

"Gold has been highly volatile this year, rising to a record cUSD5,450 per ounce on 30 January before falling to a 2026 low of cUSD4,405 per ounce on 23 March, and recovering to cUSD4,800 per ounce."

"The pullback reflects heavy liquidation amid USD strength, higher US yields, elevated oil prices, weaker equities, alongside the ongoing Middle East conflict. Since the escalation, markets have priced out at least 25bp of expected easing from the Federal Reserve (Fed) by end-2026, which is also a headwind for gold."

"Over the near term, our precious metals analyst expects gold to remain headline driven. FX is also likely to remain sensitive to shifts in geopolitical risk, with increased tensions typically supporting the USD and vice versa."

"But over the longer term, we still see a soft USD, which should be supportive for gold. Even if energy-market after-effects persist, a post-conflict environment could allow gold to maintain upward momentum, underpinned by geopolitical risk, economic policy uncertainty, potential USD weakness, shifts in the global order, and ongoing central bank demand."

"Mine supply is expected to increase modestly in 2026-27, while recycling should rise more meaningfully after a muted response to date. On the demand side, elevated prices are weighing on jewellery and coin purchases, particularly in price-sensitive emerging markets and increasingly in developed markets. These shifts have not yet undermined the broader rally, but risks would increase if investment demand remained subdued for an extended period."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)