HSBC believes that gold prices are likely to break through the psychological barrier of $5,000 per ounce in the first half of 2026.
According to TrendFocus, HSBC's chief precious metals analyst, James Steel, emphasized in a report released on January 8th that the current surge is no longer fueled solely by traditional expectations of monetary easing, but rather by a "strong cocktail" of geopolitical risks and fiscal deterioration. Previously, Deutsche Bank also significantly raised its 2026 average gold price forecast to $4450, believing that reaching the $5000 mark is imminent. While HSBC slightly adjusted its 2026 average price forecast, it comprehensively raised its long-term target prices for 2027 and beyond, demonstrating the bank's strong bullish outlook on the long-term gold market.
For investors seeking refuge in "hard assets," these two reports represent not only price predictions but also a vote of no confidence in the current geopolitical landscape and the global fiat currency system. While short-term institutional buying may lead to high volatility, continued inflows from official sectors and long-term funds are building stronger support for gold prices.
Fiscal "addiction" and geopolitical turmoil: the super fuel for gold prices
In its report, HSBC pointed out that in addition to traditional geopolitical risks (such as the Ukraine war, the US-China rivalry, and Middle East conflicts), the ever-expanding fiscal deficits of the Western world are becoming a hidden driver of rising gold prices. The US federal deficit is projected to reach $2.05 trillion in fiscal year 2026, approximately 6.5% of GDP.
This fiscal "squandering" is eroding the foundation of fiat currencies' credibility. The report emphasizes, "The increasing fiscal deficits in the US and other countries are stimulating gold demand, which could become a key factor in the future." When markets question fiscal sustainability, gold's appeal as a non-liability asset is amplified. Furthermore, HSBC's FX strategy team predicts a weaker dollar in 2026, providing solid support for gold prices.
Deutsche Bank consensus: Rigid buying is reshaping market structure
Deutsche Bank astutely captured the fundamental shift in market structure: the pricing power of gold is shifting from price-sensitive consumers (such as jewelry buyers) to price-insensitive government departments.
As Deutsche Bank stated, "Inelastic central bank purchases and ETF investment demand are replacing price-sensitive jewelry consumption demand as the dominant force in the gold market." This structural bull market, driven by central bank "rigid demand," means that even with high gold prices, buying remains strong because, for central banks, gold is the ultimate hedging tool against the tail risks of "black swan" events.
Institutional investors' FOMO and potential volatility
Despite a bullish long-term outlook, short-term trading can be fraught with risks. HSBC points out that the 2025 rally was partly driven by institutional investors' "fear of missing out," a flow of funds that is highly reversible. The report warns, "If the anticipated rate cuts fail to materialize, the rally could be capped and a pullback could occur." Current CME net long positions are high and could face profit-taking pressure at any time.
HSBC points out that the gold market in 2026 will be characterized by "high volatility and high prices." In an era of collapsing fiscal discipline and geopolitical fragmentation, $5,000 may not just be a price target, but also a vote of no confidence in the existing credit system.
