According to a report issued by HSBC Bank, the recent rise in gold prices appears to be slowing, and the precious metal could see further declines unless there is a significant escalation in geopolitical risks.
Gold reached a record high of $2,685.42 per ounce on September 26, marking gains of around 28% since the beginning of the year, positioning it for the largest annual gain in 14 years. This rise has been driven by the U.S. Federal Reserve’s interest rate cuts and geopolitical tensions.
However, the bank noted that the market’s muted response to events in the Middle East on Thursday might indicate that the gold market has become less sensitive to news from that region.
According to HSBC analysts in a note dated October 2, “safe-haven” flows seem to be shifting more toward the U.S. dollar than gold.
The analysts added, “Gradually, expectations of a 50-basis point rate cut by the end of the year have started to outweigh expectations of a 75-basis point cut, which could put pressure on gold prices.” They also noted that statements from Federal Reserve officials could gain additional significance during this period. Furthermore, gold might face downward pressure for the time being, especially with China—one of the largest buyers—being absent from the market.
