HSBC has lowered its average gold price forecasts for 2026 and 2027, attributing this to a shift towards a more restrictive monetary policy in the United States, as well as the strength of the US dollar.

The bank cut its average gold price forecast for the current year to $4,560 per ounce from $4,864, and its 2027 forecast to $4,925 from $5,000.

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It indicated that the gold price could range between $3,800 and $4,700 during the remainder of 2026, closing the year at $4,750, while its forecast for the end of 2027 stood at around $5,025.

Spot gold was around $4,100 on Thursday by 07:30 GMT, down more than 20% from the record high of $5,594.82 hit on January 29, as the conflict in the Middle East raised inflation concerns and pushed the Federal Reserve to adopt a more restrictive monetary policy. HSBC said in its report that the changing outlook on US monetary policy and its impact on the dollar are among the main reasons behind ongoing gold liquidation and price declines.

The bank added that central bank purchases have declined after contributing to the gold price rally in recent years, although long-term diversification may support prices.

The bank expects that the large outflows from exchange-traded funds seen in the first half of the year will partially reverse in the second half.

Despite lowering forecasts, HSBC noted that downside risks may be limited as a large part of the market has already adapted to the strong dollar and high interest rate environment.

It added that some factors that supported gold before the Middle East conflict, including fiscal deficit concerns, economic uncertainty, and sovereign debt burdens, remain in place.