HSBC announced reductions to its average gold price forecasts for 2026 and 2027 on Thursday, pointing to shifts in expectations around U.S. monetary policy and a stronger dollar as key drivers of the downgrade.
The bank lowered its 2026 average gold forecast to $4,560 per ounce from $4,864, and trimmed the 2027 average to $4,925 from $5,000. In its updated guidance, HSBC said gold could trade in a range of $3,800 to $4,700 for the remainder of 2026 and forecast a 2026 year-end price of $4,750. For 2027, the bank's year-end projection stood at $5,025.
Spot gold was trading around $4,100 as of 0730 GMT, a decline of more than 20% from the record $5,594.82 reached on January 29. HSBC attributed part of the pullback in prices to the market reaction to the Middle East conflict, which it said stoked inflation concerns and prompted a more hawkish shift in the Federal Reserve's monetary outlook.
HSBC summed up the market dynamics: "Changing perceptions of U.S. monetary policy and the impact this had on the dollar are among the central reasons behind further gold liquidation and price declines," the bank said.
HSBC also observed that central bank buying - a force that helped propel gold's rally in recent years - has moderated. The bank suggested that, despite this slowdown in official purchases, the long-term case for diversification into bullion could continue to provide support for prices.
The bank noted heavy exchange-traded fund outflows in the first half of the year, adding that those outflows may partially reverse during the second half. At the same time, HSBC said the market had already adjusted significantly to a stronger-dollar, higher-rate environment, which could limit further downside risks.
HSBC further argued that several pre-existing factors that supported gold prior to the Middle East developments - including concerns about fiscal deficits, ongoing economic uncertainty and sovereign debt burdens - remain intact.
The bank cautioned that the conflict retains the "power to send gold lower, but we do not believe Iran-related declines by themselves would be long lasting," HSBC said.
Outlook and context
HSBC's revisions reflect its view that shifting expectations for U.S. policy and dollar strength have driven recent liquidation in the gold market. While some structural drivers for gold are still present, the bank's shorter-term forecasts now incorporate a landscape of higher rates and a firmer currency that have weighed on bullion so far in 2026.