HSBC has issued a forecast indicating that gold prices might exceed $4,000 per ounce in the near future. The anticipated rally is attributed to various geopolitical risks, fiscal uncertainties, and increasing concerns about the Federal Reserve’s autonomy.
Reasons Behind the Price Surge
The bank noted that demand from institutional investors is likely to strengthen as they seek gold as a diversifying asset. Additionally, official sector purchases are expected to support prices through 2026.
Recent Gold Price Movements
On October 2, spot gold reached a record high of $3,896.49. This peak was influenced by the uncertainty surrounding a potential U.S. government shutdown and expectations for interest rate reductions.
- The U.S. Senate is currently deliberating on plans to resolve the ongoing government shutdown.
- This shutdown, now the 15th since 1981, has halted numerous activities, including scientific research and financial regulation.
Concerns About the Federal Reserve
Intensified concerns over the independence of the Federal Reserve have been prompted by recent political pressures. President Trump’s attempt to dismiss Fed Governor Lisa Cook raised alarms about the integrity of monetary policy decisions.
HSBC cautioned that if the Fed enacts fewer interest rate cuts than anticipated, it could impact the momentum of gold price appreciation. Despite this possibility, gold remains a favored investment during times of uncertainty, especially in low-interest-rate conditions.
Gold’s Year-to-Date Performance
This year, the price of gold has surged by over 47%. Analysts predict that central banks will continue to actively purchase gold, driven by geopolitical challenges and a desire to reduce reliance on the U.S. dollar.
However, it is essential to note that buying activity may decline from the peak levels recorded between 2022 and 2024.
