

Market Analysis
HSBC has indicated that the recent gold rally may be losing momentum and could decline further unless there is a significant escalation in geopolitical risks.
On September 26, XAU/USD reached an all-time high of $2,685.42 per ounce, marking a 28% increase this year, potentially leading to the largest annual gain in 14 years. This surge has been driven by expectations of U.S. Federal Reserve interest rate cuts and ongoing geopolitical tensions.
However, the lack of a notable market reaction to recent events in the Middle East suggests that investors might be becoming somewhat desensitized to news from that region. Currently, analysts at HSBC observe that more "safe-haven" investments are flowing into the U.S. dollar than into gold.
In their note dated October 2, HSBC noted that the case for a 50 basis point rate cut by the year's end is beginning to overshadow expectations for a 75 basis point cut, which could exert downward pressure on gold prices. The upcoming comments from Fed officials are likely to be particularly influential.
The next significant indicator, the September nonfarm payroll report, could push gold prices higher if the results are disappointing. While the ADP report showed positive outcomes, there is no reliable correlation between that report and the Labor Department’s data.
Absent negative data, however, gold prices might see a slight decline as China, a major consumer, remains inactive in the market, the bank added.
Paraphrasing text from "Investing" all rights reserved by the original author.