Gold may stay below record highs as stronger dollar bites, says HSBC

Fri July 10 2026

Gold's sharp correction has prompted HSBC to lower its price forecasts for 2026 and 2027, with the brokerage saying a stronger US dollar and a shift in Federal Reserve expectations have become the biggest headwinds for the precious metal, even as it maintains that the longer-term bull case remains intact.

The brokerage lowered its average gold price forecast for 2026 to $4,560 an ounce from $4,864 earlier, while trimming its 2027 estimate to $4,925 from $5,000. It retained its longer-term forecasts for 2028 and 2029 unchanged, signalling that it expects the current weakness to be a correction rather than the end of the broader upcycle.

For India, HSBC said gold imports have remained relatively firm despite weak jewellery demand, supported by rising institutional participation following regulatory changes that have allowed greater investment in gold-linked instruments. However, higher import duties and elevated domestic prices are likely to keep consumer demand under pressure in the near term.

Overall, HSBC expects gold to remain volatile over the coming quarters, trading within a broad range of $3,800-$4,700 an ounce for the rest of 2026. While near-term rallies may be constrained by a stronger dollar and uncertainty over Fed policy, the brokerage believes long-term investors are unlikely to abandon gold given persistent fiscal, geopolitical and reserve diversification trends.

Gold has fallen more than 20 percent from its record high of $5,450 an ounce touched in January, slipping to a low of $3,942 in June, as markets rapidly repriced expectations for US monetary policy following the appointment of Kevin Warsh as Federal Reserve Chair. Investors have moved from expecting rate cuts earlier this year to pricing in the possibility of interest-rate hikes, lifting Treasury yields and strengthening the US dollar: both traditionally negative for gold.

According to HSBC, the market's focus has now shifted decisively away from the Iran conflict and towards conventional macro drivers such as US monetary policy, real interest rates and the dollar.

"Gold's focus should shift to traditional drivers and away from the Iran conflict," the brokerage said, adding that while geopolitical risks remain elevated, they are unlikely to be the dominant force behind prices unless they escalate significantly again.

The brokerage believes much of the anticipated hawkishness has already been priced into gold, limiting further downside. While expectations of tighter monetary policy and a firm dollar could cap near-term gains, structural factors that supported bullion before the Middle East conflict remain in place, it said.

Among those structural supports are expanding fiscal deficits across major economies, elevated sovereign debt, continued central-bank diversification away from reserve currencies, and persistent geopolitical uncertainty.

HSBC argued that mounting government debt may increasingly rival monetary policy as a long-term driver of gold demand. Global public debt is expected to approach 100 percent of GDP by 2029, while countries including the United States continue to run large fiscal deficits, reinforcing gold's appeal as a liability-free safe-haven asset.

The brokerage also expects central banks to resume stronger buying later this year after moderating purchases in recent quarters because of elevated prices. Although official sector purchases slowed in 2025, they remained well above historical averages, and HSBC expects reserve diversification to continue supporting bullion over the medium term.

On the demand side, however, the picture remains mixed.

High gold prices continue to suppress jewellery consumption globally, particularly in India and China, where first-quarter jewellery demand fell 32 percent and 19 percent year-on-year, respectively. HSBC estimates global jewellery demand will decline further this year before stabilising in 2027.

At the same time, investment demand has increasingly shifted towards bars and institutional holdings rather than jewellery. The brokerage noted that bar and coin demand remained resilient, particularly in Asia, while exchange-traded fund (ETF) outflows triggered during the recent selloff could partially reverse if financial market volatility returns.

Source: https://www.moneycontrol.com/