Gold Price Forecast: XAUUSD could edge higher, albeit with limited upside over near-term – HSBC

Gold price has rallied on twin factors of inflation and geopolitics. In the view of economists at HSBC, near-term momentum for gold remains positive, but upside looks limited as the Fed’s determination to raise rates, potential weaker non-investment demand and USD strength could curb gold gains.

Gold up on risk and inflation, but downward pressure 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 normalise 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.”

“A reduction in geopolitical tensions or moderating inflation could also trigger a pullback.”