Gold Price Forecast: Further gains for XAU/USD may be limited – HSBC
19.10.2021, 08:06

Gold Price Forecast: Further gains for XAU/USD may be limited – HSBC

Gold traded sharply higher, as US Treasury yields and the USD slipped after the US CPI release but further gains over the near term may be limited, in the view of analysts at HSBC. A gradually stronger USD, following the Fed’s path towards normalisation, may weigh mildly on the yellow metal.

Gold faces gradual withdrawal of monetary and fiscal support

“The latest US CPI data indicates that the inflation level remained elevated in September. While the CPI data, in addition to easing in US Treasury yields and the USD, may be supportive of gold, the degree to which gold rallied is a little hard to explain. As such, further gains over the near term may be hard to come by, short of a steeper decline in US Treasury yields or the USD.”

“Comments on inflation from groups like the International Monetary Fund (IMF) may lend support to gold as they appear to be becoming more frequent. However, the scare over inflation could aid gold if US Treasury yields do not rise. Should yields move higher to offset inflation, the impact on gold would likely be more negative.”

“Global monetary and fiscal policies are no longer outright supportive of gold in the US or globally. With the era of ultra-loose monetary policies coming to an end and fiscal stimulus being pulled back, gold investment is down.”

“We still believe the USD is gradually transitioning to a stronger path due to the slowdown in global growth and the Fed’s path towards normalisation. A gradually stronger USD could be mildly negative for gold.”

 

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