Gold Price Forecast: XAU/USD may not sustain levels above $2,000 – HSBC

Gold hit a new high in December 2023 and has remained well above $2,000 per ounce so far this year. Economists at HSBC analyze the yellow metal’s outlook.

Pitfalls lie ahead

While market sentiment is bullish, we think that the price of Gold is overstretched and may decline over the near term in the absence of notable economic or political news. The high price of Gold is also limiting demand for jewellery, coins, and bars, mainly in price-sensitive emerging markets, but also in less price-sensitive Western markets.

Gold is historically sensitive to US real rates, and while there has been a significant disconnect in this relationship, we think that positive real rates could be a headwind for XAU/USD this year. 

Should the USD rebound, Gold prices may face downward pressure, but a sustained USD weakness should be Gold-positive.

Several bedrock factors will sustain the price of Gold at what would still be a historically high level. For example, geopolitical and trade risks are elevated and may stay high in 2024, as 75 nations hold elections, lending underlying support to gold prices. And central bank demand remains historically strong, triggered by geopolitical risks and portfolio diversification needs, but may not be fully sustained at price levels above $2,000.