HSBC has lowered its average gold price projections for 2026 and 2027 in the wake of a notable retreat in bullion prices, yet the bank says structural fiscal pressures and elevated geopolitical uncertainty leave the metal positioned to resume its advance.
Gold reached an all-time intraday high of $5,450 an ounce on January 30 this year before reversing course. Prices slid to a 2026 low of $3,942 on June 30. The most recent downward pressure followed comments from new Federal Reserve Chair Kevin Warsh that suggested a more hawkish policy approach, with growing expectations for higher rates and a firmer dollar weighing on the market. Earlier declines were linked to the Iran conflict, which pushed up oil prices, inflation and yields.
Forecast revisions
HSBC reduced its 2026 average gold forecast to $4,560 an ounce from a prior $4,864, and cut its 2027 average forecast to $4,925 from $5,000. The bank left its forecasts for 2028 and 2029 unchanged at $5,200 and $5,300 per ounce, respectively. HSBC now projects a 2026 year-end price of $4,750 and a 2027 year-end price of $5,025.
Despite the downward revision to near-term averages, HSBC's chief precious metals analyst, James Steel, retains what he describes as "a positive posture" on gold.
"Ongoing fiscal profligacy, in many countries, but notably the U.S. (aggravated by the war) and economic uncertainty can revive gold’s safe haven status," Steel wrote, adding that elevated geopolitical risks are likely to inspire further gold purchases without triggering forced liquidation.
Official-sector demand
Central bank buying has been an important driver of the market. HSBC notes that purchases slowed to 863 tonnes in 2025 from roughly 1,100 tonnes annually between 2022 and 2024, a moderation HSBC attributes largely to high prices. Nonetheless, the bank expects official-sector demand to reaccelerate later in the year, citing long-term diversification policies among central banks.
HSBC maintained its central bank demand forecasts at 680 tonnes for 2026 and 850 tonnes for 2027.
Supply and private-sector demand
On supply, HSBC sees mine output for 2026-27 rising modestly despite ongoing production challenges, while recycling is expected to increase more materially across the same period.
The bank flagged the impact of elevated prices on consumer demand: high prices are "sharply eroding jewelry demand in key consumer countries," prompting HSBC to lower its 2026 jewelry demand forecast to 1,377 tonnes from 1,550 tonnes. By contrast, bar demand has held up strongly, particularly among institutional investors in Asia, and coin demand may be approaching a trough after steep declines.
HSBC's foreign exchange research team projects a firm U.S. dollar, which the bank expects will limit the scale of any rally in gold.
ETF flows and longer-term support
Large-scale liquidation in gold exchange-traded funds has been a notable feature of the recent pullback. HSBC suggests some of that liquidation could reverse as the structural conditions that supported gold prior to the Iran conflict reassert themselves. The bank points to rising fiscal deficits globally and the resulting pressure on sovereign debt markets as a potential foundation for higher gold prices over time.
Bottom line
HSBC's updated outlook reflects a lower near-term path for gold prices amid tighter monetary policy expectations and a stronger dollar, but the bank emphasizes durable drivers - fiscal imbalances, geopolitical risk and potential renewed central bank buying - that it believes could restore gold's upward trajectory beyond the immediate pullback.