Gold Price Momentum Shows Signs of Weakening, Warns HSBC

Precious metal’s strong run may be nearing a pause as bullish factors begin to ease

Gold Rally May Be Losing Steam

HSBC has cautioned that the recent surge in gold prices could be losing momentum, following several months of strong gains. The bank notes that although investor demand remains solid, the bullish trend is beginning to show signs of fatigue.

Gold has been one of the best-performing assets in 2025, driven by geopolitical tensions, economic uncertainty, and expectations of lower interest rates. However, analysts at HSBC believe the rally is entering a cooling phase.

What's Behind the Slowdown?

While gold prices have been supported by key tailwinds, HSBC highlights that some of these factors may be peaking, including:

• Reduced fear of rate hikes from major central banks
• A stronger US dollar, making gold more expensive for non-dollar buyers
• Profit-taking by short-term traders after months of gains
• Declining safe-haven demand as global tensions stabilise

These developments could cap upside potential in the short to medium term.

Gold Still a Valuable Long-Term Hedge

Despite the warning, HSBC does not anticipate a dramatic sell-off. Instead, it expects gold to consolidate within a range as the market digests recent gains.

The precious metal is still considered a valuable portfolio hedge against inflation and economic uncertainty. Central bank buying, particularly from emerging markets, also continues to provide strong support.

Traders Turn Cautious

Recent trading patterns show that speculative investors have started to pare back their bullish bets:

• Futures markets have seen a modest decline in long positions
• ETF inflows into gold-backed funds have slowed, suggesting waning enthusiasm

This shift indicates that momentum traders may be locking in profits while awaiting fresh catalysts.

What’s the Outlook?

According to HSBC, gold could now enter a sideways trading phase, with prices hovering between $2,250 and $2,350 per ounce. The bank suggests that any further rally would likely require:

• A new round of rate cuts from the US Federal Reserve
• A resurgence in geopolitical tensions
• Significant currency market volatility

Absent those triggers, the path of least resistance could be flat to slightly lower over the coming months.

Summary

• HSBC says gold rally is losing momentum after strong gains
• Bullish drivers like rate cuts and safe-haven demand are fading
• Market entering potential consolidation phase
• Long-term fundamentals remain supportive
• Investors should expect limited upside in the near term

Sources: (Investing.com)