Gold Prices Rise, But HSBC Lowers Medium-Term Forecasts Amid Fed Uncertainty

Gold prices climbed more than 1% on Thursday, finding support from bargain hunters after dipping to a one-week low. Spot gold rose 1.3% to $4,130.58 an ounce, while August delivery gold futures in New York gained 1.4% to $4,140.80. Investors are closely watching geopolitical developments, particularly in the Middle East.

Bob Haberkorn, a senior market strategist at RJO Futures, noted that the previous day's significant price drop attracted some buyers. He emphasized that the US Federal Reserve's monetary policy is the most crucial factor influencing gold in the short term. A shift towards a more dovish interest rate stance by the Fed could further boost gold and silver prices, whereas indications of necessary further rate hikes might exert downward pressure.

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The Fed is the most important factor affecting the trend of gold in the short term.

Geopolitical tensions remain a backdrop, with recent US airstrikes on Iran and subsequent Iranian attacks on US military facilities in neighboring countries testing a three-week ceasefire. Market expectations, according to the CME FedWatch Tool, place the probability of a September rate hike by the Fed at approximately 64%.

Investors are now focused on upcoming US inflation data and testimony from Fed Chair Jerome Powell before Congress to gain further clarity on the future direction of monetary policy. In a separate development, HSBC Bank revised its medium to long-term gold price predictions downward. The bank lowered its 2026 average gold price forecast to $4,560 per ounce from $4,864, and its 2027 forecast was adjusted to $4,925 from $5,000.

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If the Fed turns to a more dovish interest rate stance, gold and silver prices are expected to rise further; but if the Fed hints at the necessity of further interest rate hikes, both gold and silver may face pressure.