This reframes gold as less reliable in acute risk-off events, particularly where USD strength dominates. Near term, gold may remain volatile and more correlated with broader risk sentiment. Longer term, central bank demand and de-dollarisation still provide structural support, but positioning matters more than macro alone.
Summary:
- HSBC says gold’s recent price action has defied traditional safe-haven behaviour
- Metal has sold off sharply despite geopolitical tensions and lower yields
- Shift toward retail and leveraged ownership seen driving volatility
- Gold increasingly behaving like a risk asset in 2026
- Long-term case remains intact, supported by central bank buying and de-dollarisation
- Volatility expected to remain a defining feature of the gold market
HSBC Asset Management says gold’s recent performance is challenging its traditional role as a safe-haven asset, with the metal declining sharply despite heightened geopolitical tensions and falling bond yields.
In a note, the bank highlighted that gold has behaved more like a risk asset in 2026, diverging from the conventional playbook that typically sees prices rise during periods of conflict and economic uncertainty. The shift comes even as the Middle East war has intensified and energy-driven inflation risks have increased, conditions that would historically support gold demand.
Instead, gold has come under pressure, with HSBC pointing to a combination of a stronger US dollar and a hawkish repricing of interest rates as key headwinds. These factors have raised the opportunity cost of holding non-yielding assets and reduced demand from non-US investors. However, the bank notes that similar macro conditions in the past did not produce the same degree of weakness, suggesting a structural change in how gold trades.
A key factor behind this shift is the evolving composition of market participants. HSBC highlights that ownership has increasingly tilted toward retail and leveraged investors, whose positioning can amplify price swings. During periods of market stress, these participants are more likely to liquidate holdings, contributing to sharper drawdowns and increased volatility.
The bank also notes that traditional relationships, such as gold’s inverse correlation with real yields, have weakened in recent years. While not entirely broken, these dynamics appear less reliable as drivers of price action, reflecting broader changes in market structure and demand patterns.
Despite the near-term volatility, HSBC maintains that the long-term investment case for gold remains intact. Ongoing central bank purchases and gradual diversification away from the US dollar continue to underpin structural demand. However, the bank cautions that gold’s safe-haven status should not be viewed in isolation, emphasising the importance of broader portfolio diversification in navigating an increasingly complex macro environment.
