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HSBC think recent gold themes may abate

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(Kitco News) - The gold price has had a pretty good week and is trading at $1972/oz on good Friday up 1.37% from this week's open. Economists at HSBC have noted, the near-term momentum for gold remains positive, but the upside looks limited as the Fed’s determination to raise rates, potential weaker non-investment demand and USD strength could curb gold gains.

Gold is up on risk and inflation, but downward pressure could be ahead. “Combined inflation and geopolitical risks could send gold higher over the near-term, but gains will be increasingly limited, as US yields look firm and underlying non-investment demand could be eroded by high gold prices.”

“The Fed’s determination to normalize its monetary policy, in conjunction with more moderate fiscal spending in most economies, will likely weigh on gold in 2H and beyond, and further modest gains in the USD will probably constrain gold rallies as well.”

Further to this, the bank says “A reduction in geopolitical tensions or moderating inflation could also trigger a pullback.”


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