HSBC cuts 2026-27 gold forecasts amid hawkish Fed

Brokerage cites stronger dollar, weaker bullion sentiment and higher interest rate expectations while retaining positive long-term expectations

HSBC Securities (USA) on Thursday lowered its average gold price forecasts for 2026 and 2027, citing a stronger US dollar and a more hawkish US Fed, while maintaining a positive long-term outlook for the precious metal due to persistent fiscal and geopolitical risks.

Fed weighs

The brokerage reduced its average gold price forecast for 2026 to $4,560 per ounce, down $304 from its earlier estimate of $4,864 per ounce. It also trimmed its 2027 forecast to $4,925 per ounce from $5,000 per ounce. HSBC expects gold to end 2026 at $4,750 per ounce and projects a year-end price of $5,025 per ounce for 2027. 

However, it left its forecasts for 2028 and 2029 unchanged at $5,200 per ounce and $5,300 per ounce, respectively. The brokerage said the revisions reflect the sharper-than-expected fall in gold prices this year following increasingly hawkish comments from Fed Chair Kevin Warsh, which strengthened the dollar and reduced investor appetite for bullion.

Gold reached a record $5,450 per ounce on January 30 before falling to $3,942 per ounce by June 30 as expectations of higher US interest rates weighed on sentiment. 

Demand shifts

Despite lowering its near-term forecasts, HSBC said the long-term investment case for gold remains intact. It expects institutional demand for large gold bars to stay strong, supported by regulatory changes allowing greater bullion purchases by financial institutions in India and China.In contrast, demand for jewellery and gold coins is expected to remain subdued until 2027 as elevated prices continue to discourage retail buying.

The brokerage also believes exchange-traded fund selling could ease as investors return to gold for portfolio diversification and safe-haven protection. Rising fiscal deficits and concerns over sovereign debt are expected to provide additional support for bullion prices.

HSBC expects central bank purchases, which slowed last year and in the first half of 2026, to strengthen later this year as monetary authorities continue diversifying reserve holdings. 

It also said any escalation in global trade tensions would likely boost gold demand. On the supply side, HSBC raised its 2026 mine production forecast by 51 tonnes to 3,876 tonnes, reflecting the incentive provided by elevated prices.