HSBC has significantly adjusted its average gold price forecasts upwards, driven by mounting geopolitical risks, fiscal imbalances, and the expectation of continued monetary easing. This shift reflects the growing demand for gold as a safe-haven asset in turbulent global markets.
HSBC Adjusts Gold Price Forecasts for 2024 and Beyond
Amid rising global tensions and economic instability, HSBC has raised its gold price forecasts for 2024, projecting an average price of $2,395 per ounce—up from its previous estimate of $2,305. The bank has also increased its forecast for 2025 to $2,625 per ounce, highlighting the impact of continued uncertainty and fiscal deficits on gold’s appeal.
For the longer term, HSBC expects gold prices to stabilize at $2,200 per ounce, up from the previously estimated $2,000. This bullish outlook emphasizes the ongoing demand for gold, particularly from investors seeking protection against economic volatility.
Geopolitical and Economic Factors Driving Gold Demand
The revised gold price forecasts are closely linked to persistent geopolitical risks, especially in the Middle East, and growing concerns about global fiscal deficits. HSBC analysts note that these factors are contributing to a surge in gold demand, particularly among hedge funds and other institutional investors.
The easing of monetary policies worldwide is another key driver. While rate cuts by central banks may continue to support gold prices, HSBC warns that further reductions might become less effective over time.
The Role of ETFs and Central Bank Demand
HSBC points out that, despite liquidations from gold exchange-traded funds (ETFs), real money purchases remain robust, contributing to the upward momentum in the gold price forecasts. Central banks also continue to be major buyers of gold, although their purchases have slowed compared to previous years.
Looking ahead, HSBC predicts that gold will trade within 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.
Potential Risks to Gold’s Rally
While HSBC’s gold price forecasts remain optimistic, the bank acknowledges that the rally may face some challenges. A stronger U.S. dollar, bolstered by relative economic strength, could limit gold’s upside potential. Additionally, central bank demand for gold may taper off unless there is a significant price correction.
Conclusion
HSBC’s raised gold price forecasts reflect the ongoing demand for gold as a safe-haven asset amid global economic and geopolitical uncertainties. Investors and traders should keep an eye on potential headwinds, such as a stronger dollar and reduced central bank purchases, as they assess the future trajectory of gold prices.