HSBC Sees Gold Storming $5,000 Before 2026 Correction

Geopolitical tensions and rising global debt will both contribute toward a possible price of $5,000/oz for gold by H1 2026, according to HSBC. It has adjusted its 2026 average estimate for gold to $4,587 due to concerns about possible overly strong early gains in gold prices leading to a sharp correction at a later date. On Thursday, spot gold was trading around $4,427 following the most robust annual performance seen in 2025.

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Wide Volatility Range Expected

HSBC expects that gold price movements will be volatile and has provided an estimate of a $5,050 to $3,950 price range in 2026, with a year-end target of approximately $4,450. Gold is subject to elevated volatility due to competing forces: the flow of money into safe-haven assets and the potential for rotation into other risk assets.

Key Risk Factors Identified

The potential for deep corrections in gold prices exists if geopolitical risk decreases or if the Federal Reserve stops its current round of interest rate cuts, which would decrease the attractiveness of gold compared to yield-bearing assets. However, these risks are counterbalanced by the potential for sustained debt monetisation by G7 countries, as well as tensions in the Middle East, providing a measure of support for gold. Continued diversification by central banks from U.S. dollar-denominated reserves continues to support demand for physical gold.

Strategic Implications

The price increase above $5,000 per ounce will cause a substantial increase in mined Gold supply. Above $4,500, all-in sustaining cost for junior gold companies will open up 20% of new production. The MCX futures price in India is tracked closely with dollar gold prices and has also increased the local ETF price flow. Sovereign gold holdings exceed 36,000 tons globally, making them less price-sensitive.

India Investor Angle

Domestic jewellery exports are under pressure due to 50% tariffs on jewellery when exported to the United States. The sovereign gold bonds yield 2.5% with capital appreciation. Furthermore, the Reserve Bank of India's (RBI) holdings of over 800 tons of gold give it the ability to cushion the volatility in its importation bills. Periods of correction in gold prices provide an opportunity for strategic accumulation through the Systematic Investment Plan (SIP) prior to the government indicating where the duty will be on imports.
HSBC's view is that it retains a strong bullish view based on the strong fundamentals, whilst also balancing the risk that technical exhaustion may present a challenge between now and the middle of 2026.