According to HSBC commodity analysts, gold prices in 2026 are trending to move more like a risky asset than a traditional safe-haven asset, as they fall sharply amid rising geopolitical tensions and the strengthening USD. However, the trend of diversifying reserves away from the USD still supports the long-term outlook for the precious metal.
Experts from HSBC Group's asset management division (HSBC AM) said that the developments in gold prices since the outbreak of the conflict with Iran have gone against normal expectations. Accordingly, during periods of increasing geopolitical instability, gold is often supported, similar to the strong increase that lasted for two years before. However, in March this year, gold prices fell by about 15%.
HSBC believes that the strengthening USD is one of the factors limiting demand from non-US investors, while the adjustment of interest rate policy expectations increases the opportunity cost of holding non-performing assets such as gold. However, the bank also noted that in 2022, gold once maintained stability even when the USD and interest rates increased sharply, showing that the traditional relationship between these factors and gold prices is changing.
According to HSBC, another reason is that the investor structure in the gold market has changed significantly, with the proportion of individual investors and leverage investors increasing. In market volatility periods, this group of investors tends to sell assets to supplement liquidity.
However, HSBC believes that the long-term investment outlook for gold is still positive, especially in the context that many central banks continue to diversify foreign exchange reserves in the direction of reducing dependence on the USD. However, recent fluctuations also show that portfolio diversification needs to be implemented in the direction of balancing between many types of assets.
Previously, on February 15, Mr. James Steel - Head of Precious Metals Analysis at HSBC said that volatility will be a prominent feature of the precious metals market in 2026, as the policy of the US Federal Reserve (Fed) and the diễn biến of the USD continue to affect investment demand.
Talking to CNBC, Mr. Steel said that the traditional relationship between the yield of 10-year US government bonds and gold prices has changed significantly in recent years. Previously, real yields often had a clear reverse correlation with gold prices, but now gold's sensitivity to yield fluctuations has decreased compared to before.
According to Mr. Steel, the increase in buying activity by individual investors, geopolitical risks and central banks' demand for gold accumulation are factors contributing to changing this relationship.
He also believes that as long as the Fed maintains independence in monetary policy management, this factor will still play an important role in the developments of the gold market. Any sign affecting the independence of the central bank can affect the price of precious metals.
Regarding the role of gold in the reserve diversification strategy, Mr. Steel believes that the USD will continue to maintain its position as the key global reserve currency for a long time. However, some central banks may reduce their USD holdings by increasing gold reserves.
According to HSBC, the amount of gold purchased by central banks since 2022 has been about two to three times higher than the previous decade's average, thereby becoming one of the important factors supporting the long-term upward trend of the precious metal.
Mr. Steel also said that although gold prices have not recently continued to set new highs, this does not change the long-term upward outlook of the market. After the strong upward period at the beginning of the year, higher volatility is a common occurrence for a market that is attracting large capital flows.
According to him, although gold is a safe haven asset and of high quality in the investment portfolio, that does not mean that the precious metal will not experience strong fluctuations in the short term.
