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HSBC analysts Willem Sels and Lucia Ku note that gold has failed to capitalize on the Middle East conflict for a rally and has since traded lower despite hitting a record high earlier this year. They suggest gold may remain range-bound in the near term but could see upside potential later. The analysts highlight that geopolitical tensions typically drive gold as a safe-haven asset, yet recent underperformance indicates shifting market dynamics, including reduced central bank purchases and stronger U.S. dollar demand.
For markets, this analysis underscores the complex interplay between geopolitical risks and macroeconomic factors affecting gold. Traders should monitor central bank policies, U.S. dollar strength, and inflation trends, which could influence gold's trajectory. The mixed signals from HSBC reflect uncertainty in the precious metals sector, requiring investors to balance risk-on and risk-off scenarios.
Looking ahead, investors should watch for shifts in central bank gold purchases, particularly from China and India, as well as potential changes in U.S. monetary policy. The analysts caution that while short-term volatility may persist, long-term fundamentals like inflation and currency devaluation risks could eventually support gold prices. Key levels to monitor include $2,300 and $2,400 per ounce.
