The drivers of gold prices have shifted from expectations of rate cuts to deep concerns over worsening fiscal deficits and geopolitical risks. HSBC believes that gold prices are expected to break through the psychological threshold of $5,000 per ounce in the first half of 2026. This article is sourced from an article by Wall Street Insights, organized, translated, and written by Foresight News.
(Previous summary: Bridgewater’s Dalio Annual Report: AI is in the early stage of a bubble, reasons why US stocks underperform non-US stocks and gold?)
(Additional background: Bloomberg strategist Mike McGlone: Gold, silver, and US stocks in 2025 “rise too much,” facing correction risks this year)

Table of Contents

• Fiscal “addiction” and geopolitical chaos: the super fuel for gold prices
• Deutsche Bank consensus: rigid buying is reshaping market structure
• Institutional investors’ “FOMO” and potential volatility

HSBC believes that gold prices are expected to break through the psychological threshold of $5,000 per ounce in the first half of 2026.

According to reports from Trend Trading Platform, HSBC’s chief precious metals analyst James Steel emphasized in a report released on January 8 that the current surge is fueled not only by traditional monetary easing expectations but also by a “potent cocktail” of geopolitical risks and fiscal deterioration. Previously, Deutsche Bank also significantly raised its 2026 average gold price forecast to $4,450 and believed that reaching the $5,000 mark was imminent. While HSBC slightly adjusted its 2026 average price forecast, it raised its long-term target prices for 2027 and beyond, demonstrating the bank’s strong confidence in a long-term gold bull market.

For investors seeking “hard asset” refuge, these two reports are not only price forecasts but also a “vote of no confidence” in the current geopolitical landscape and the global fiat currency system. Although short-term institutional chasing may lead to high volatility, ongoing inflows from official sectors and long-term funds are building a higher bottom support for gold prices.

Fiscal “addiction” and geopolitical chaos: the super fuel for gold prices

HSBC pointed out in the report that, besides traditional geopolitical risks (such as the Ukraine war, US-China rivalry, and Middle East conflicts), the increasingly swollen fiscal deficits in the Western world are becoming an invisible driver of gold price increases. The US federal deficit is projected to reach $2.05 trillion in the 2026 fiscal year, accounting for about 6.5% of GDP.

This fiscal “extravagance” is eroding the credit foundation of fiat currencies. The report emphasizes: “The continuous increase in fiscal deficits in the US and other countries is stimulating demand for gold, which could become a key factor in the future.” When markets doubt fiscal sustainability, the appeal of gold as a non-debt asset is amplified infinitely. Coupled with HSBC’s forex strategy team predicting a weakening dollar in 2026, this provides solid bottom support for gold prices.

Deutsche Bank consensus: rigid buying is reshaping market structure

Deutsche Bank keenly captures a fundamental shift in market structure: the pricing power of gold is shifting from price-sensitive consumers (such as jewelry buyers) to price-insensitive official sectors.

As Deutsche Bank states, “The lack of price elasticity in central bank purchases and ETF investment demand is replacing the price-sensitive jewelry demand, becoming the dominant force in the gold market.” This structural bull market led by central bank “rigid demand” means that even at high gold prices, buying remains strong, as central banks see gold as the ultimate hedge against “black swan” tail risks.

Institutional investors’ “FOMO” and potential volatility

Despite a long-term bullish outlook, short-term trading may be fraught with risks. HSBC pointed out that the rebound in 2025 was partly driven by institutional investors’ “fear of missing out,” and this capital flow is highly reversible. The report warns: “If the expected rate cuts do not materialize, the rebound could be suppressed and a correction may occur.” Currently, CME net long positions are high and could face profit-taking pressure at any time.

HSBC indicates that the gold market in 2026 will feature “high volatility, high prices.” In an era of fiscal breakdown and geopolitical fragmentation, $5,000 may be more than just a price target; it could also be a market vote of no confidence in the current credit system.