Gold's momentum is fading — and a pullback is coming, says HSBC analyst

Gold's recent rally, which saw it briefly touch $3500/oz before a 5% pullback, is widely seen as fading. HSBC's James Steele predicts slackening demand, with his 2025/2026 price targets remaining below current levels, aligning with Citi's earlier forecast for a 25% correction. This outlook persists despite traditional tailwinds like geopolitical volatility and dollar weakness failing to propel prices higher, suggesting a potential shift in gold's market drivers and an impending correction.

Analysis

Gold's recent rally appears to be losing momentum, as evidenced by a 5% pullback from its all-time high of $3500 per ounce. This price weakness is particularly noteworthy as it occurred despite the presence of traditionally bullish catalysts, including geopolitical volatility and a weaker U.S. dollar, suggesting a potential decoupling from historical drivers. The bearish outlook is reinforced by analyst consensus, with HSBC's James Steele forecasting slackening demand and setting 2025-2026 price targets below current levels. This view aligns with a prior report from Citi which projected a significant 25% correction. Furthermore, market behavior indicates a toppy sentiment, highlighted by retail investors taking profits following the April surge, signaling that the risk of a near-term pullback is increasing.

Key Decisions for Investors

• Given the bearish analyst consensus and price weakness, investors with long gold positions should consider trimming exposure or implementing hedging strategies to protect against a potential correction.
• Prospective buyers should exercise caution, as current prices are above forward-looking targets from major analysts, suggesting a more favorable entry point may emerge after a further pullback.
• Monitor gold's reaction to geopolitical and currency fluctuations closely, as its failure to rally on recent tailwinds indicates a potential shift in market dynamics that could impact traditional investment theses.