Gold Shines Through Volatility: A Golden Future in Sight

HSBC's report predicts a robust future for gold amid global uncertainties. Despite market fluctuations, gold has seen a significant rise, bolstered by central bank buying and retail investments. The metal's potential is enhanced by geopolitical and economic challenges, along with expected US interest rate cuts.

Gold's appeal remains undiminished even during periods of market volatility, as it continues to be a potent hedge against global economic uncertainty, according to HSBC's Think Future 2026 report. The precious metal has been drawing robust interest from central banks and retail investors alike.

HSBC projects that gold is on course for its most stellar annual performance in nearly 50 years, with a year-to-date surge of about 54 percent. This rise, driven by global uncertainties and fears of US dollar devaluation, saw prices hit a record USD 4,380 per ounce in October, before a profit-taking retreat. Prices have since stabilized around USD 4,000, showing signs of resuming an upward trajectory.

Sustained central-bank purchases are a key driver of gold's performance, with the metal's share in global reserves climbing from 13 percent in 2022 to around 22 percent by mid-2025. Despite high prices, institutional interest remains strong as entities seek diversification amid geopolitical and fiscal challenges. Gold's resilience is further strengthened by robust retail demand, notably through gold ETFs, which reflect ongoing concerns about inflation and the US dollar's stability. Though gold's recent correlation with equities appears atypical, HSBC attributes this to investor behavior rather than a shift in gold's safe-haven status. Expectations of further rate cuts by the US Federal Reserve also support a bullish outlook for gold.

(With inputs from agencies.)