Gold extended a record rally to soar past $4,300 an ounce for the first time on Thursday, as tensions between the U.S. and China pushed investors to safe-haven assets, while rising expectations of a Federal Reserve (Fed) rate cut this month amplified the momentum.
Spot gold hit a record $4,312.00 per ounce, while U.S. gold futures for December also hit a record high of $4,328.70 per ounce.
Traditionally seen as a store of value during times of economic and geopolitical instability, gold has risen more than 60% so far in 2025.
HSBC has raised its 2025 average gold price forecast to $3,355 per ounce from $3,215 due to safe-haven demand driven by geopolitical tensions, economic uncertainty, and a weakening U.S. dollar.
"Sentiment remains bullish as rallies are expected to continue in 2026 aided by official sector buying and institutional demand for gold as a diversifier," the bank said in a note.
HSBC also raised its 2026 average gold price forecast to $3,950 from $3,125.
Mounting fiscal deficits in the U.S. and other major economies are driving increased demand for gold, HSBC said.
China on Thursday accused the U.S. of stoking panic over Beijing's rare earth controls and said Treasury Secretary Scott Bessent had made "grossly distorted" remarks about a top Chinese trade negotiator, rejecting a U.S. call to roll back the curbs.
"Central bank demand is likely to remain high, buoyed by geopolitical risks and dollar diversification, but below peak 2022-23 levels," HSBC said.
However, if the Fed delivers fewer rate cuts than currently projected for this year and next, it could temper the rally, HSBC said.
Investors are pricing in a near-certain 25-basis-point rate cut at this month's Fed meeting, with expectations of another cut in December.
Further, gradual declines in global inflation may dampen jewellery purchases driven by inflationary concerns, HSBC said.
