SKN | HSBC Cuts Gold Price Forecasts as Stronger Dollar and Higher Rates Weigh on Outlook

Key Takeaways:

• HSBC lowered its average gold price forecasts for 2026 and 2027, citing expectations for tighter U.S. monetary policy and continued strength in the U.S. dollar.
• The bank now forecasts average gold prices of $4,560 per ounce in 2026 and $4,925 per ounce in 2027, both below its previous estimates.
• Despite the downgrade, HSBC believes central bank demand, fiscal concerns, and geopolitical risks should continue providing long-term support for gold prices.

HSBC Revises Gold Outlook Lower

HSBC has reduced its forecasts for average gold prices in both 2026 and 2027 as changing expectations surrounding U.S. monetary policy and a stronger U.S. dollar reshape the outlook for the precious metal. The bank believes higher interest rates and persistent dollar strength will continue limiting gold’s upside, even as longer-term structural drivers remain supportive.

The revised outlook reflects a more cautious near-term view following gold’s retreat from record highs earlier this year.

Higher Rates Pressure Non-Yielding Assets

HSBC now expects gold to average $4,560 per ounce in 2026, down from its previous forecast of $4,864, while its 2027 forecast has been lowered to $4,925 from $5,000.

The bank expects gold to trade between $3,800 and $4,700 per ounce during the remainder of 2026 before ending the year around $4,750. For 2027, HSBC projects gold could finish the year near $5,025.

According to the bank, expectations that the Federal Reserve will maintain relatively restrictive monetary policy have strengthened the U.S. dollar, reducing the appeal of gold, which does not generate interest income.

Investor Positioning Has Shifted

HSBC noted that gold prices have declined significantly from the all-time highs reached earlier this year as investors reassessed expectations for U.S. interest rates. The stronger dollar has contributed to liquidation of gold investment positions, while reduced demand from central banks has removed one of the major sources of support that fueled previous rallies.

Although central bank purchases have moderated, HSBC believes they continue to play an important role in long-term reserve diversification and should remain supportive for the market over time.

Supportive Factors Remain Intact

Despite lowering its forecasts, HSBC does not expect a prolonged collapse in gold prices. The bank believes markets have already adjusted to much of the impact from higher interest rates and dollar strength, limiting the scope for further significant declines.

HSBC also expects some outflows from gold-backed exchange-traded funds during the first half of the year to partially reverse in the second half as investors reassess portfolio allocations.

Meanwhile, concerns surrounding fiscal deficits, sovereign debt burdens, global economic uncertainty, and geopolitical tensions continue to provide underlying support for gold as a traditional safe-haven asset. While developments in the Middle East could trigger short-term volatility, HSBC does not expect events related solely to Iran to materially alter gold’s long-term trajectory.

Outlook

HSBC’s revised forecasts reflect a more balanced outlook for gold as stronger U.S. monetary policy expectations and a resilient dollar weigh on prices. Nevertheless, the bank believes structural demand from reserve diversification, fiscal concerns, and ongoing geopolitical uncertainty should continue supporting gold over the longer term, even if near-term gains become more limited.

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