The gold rally is beginning to look like it has stalled, said HSBC, and the precious metal may ease further unless there is a severe geopolitical risk escalation.
XAU/USD rose to a record $2,685.42 per ounce on Sept. 26, and has gained around 28% so far this year - heading for the biggest annual gain in 14 years - fuelled by the start of U.S. Federal Reserve interest rate cuts and geopolitical tensions.
However, the lack of a response so far Thursday to events in the Middle East may indicate that the gold market is becoming slightly inured to news from that region.
Right now, however, more “safe-haven” buying seems to be going into the US dollar than into gold, analysts at HSBC said, in a note dated Oct. 2.
“Gradually, the argument for 50bp of cuts by year end is outweighing expectations of 75bp of cuts. This could weigh on gold,” HSBC added. “Fed officials’ comments may take on added significance.”
The next major piece of data, the nonfarm payroll release for September, has the potential to push gold higher if the results are disappointing.
While the ADP release was positive, there is no firm correlation between that report and the Labor Department data.
Short of that, however, gold may head slightly lower as China – a major buyer – remains out of the market, the bank added.
