Oct 3 (Reuters) - HSBC said gold could trade above $4,000 per ounce in the near term, driven by geopolitical risks, fiscal uncertainties, and threats to the Federal Reserve’s independence.
"Rallies can continue into 2026 aided by official sector buying; institutional demand for gold as a diversifier can stay robust," the bank said in a note dated Friday.
Spot gold scaled a record high of $3,896.49 on Thursday amid elevated uncertainty from a U.S. government shutdown and rising expectations of interest rate cuts.
The U.S. Senate will vote again on Friday on dueling Democratic and Republican plans to end a government shutdown now entering its third day, though there is no sign that either plan will win passage. The shutdown, the 15th since 1981, has suspended scientific research, economic data reports, financial regulation, and a wide range of other activities.
Meanwhile, concerns over the Fed’s independence have intensified following U.S. President Donald Trump’s attempt to fire Fed Governor Lisa Cook, raising fears of political interference in monetary policy decisions.
HSBC said that if the Fed delivers fewer rate cuts than currently projected this year and next, it could potentially curb gold’s price rally.
Gold, often seen as a safe store of value during times of uncertainty and favored in a low-interest-rate environment, has gained over 47% so far this year.
Looking ahead to 2026, HSBC said central banks are expected to remain strong buyers of gold, supported by geopolitical risks and efforts to diversify away from the dollar, although purchases may ease from the peak levels seen between 2022 and 2024.
Reporting by Ashitha Shivaprasad and Anushree Mukherjee in Bengaluru
