Geopolitics + rising fiscal deficits, will gold surge to $5,000 in the first half of 2026?

HSBC believes gold prices are likely to break through the psychological barrier of $5,000 per ounce in the first half of 2026. According to Chase Trading Desk, HSBC’s Chief Precious Metals Analyst James Steel emphasized in a report published on January 8 that the fuel behind this surge is no longer just the traditional expectation of monetary easing, but a “potent cocktail” mixing geopolitical risk and fiscal deterioration. Previously, Deutsche Bank also raised its average gold price forecast for 2026 sharply to $4,450, and believes that reaching the $5,000 mark is within sight. Although HSBC has slightly adjusted its average price prediction for 2026, it has raised its long-term target prices for 2027 and beyond comprehensively, demonstrating the bank’s strong bullish outlook on gold in the long run. For investors seeking “hard asset” shelter, these two reports are not only price forecasts, but also constitute a “vote of no confidence” in the current geopolitical landscape and the global fiat currency system. Although short-term chasing by institutional investors may bring high volatility, continuous inflows from official sectors and long-term funds are building higher fundamental support for gold prices. Fiscal “Addiction” and Geopolitical Turmoil: Super Fuel for Gold Prices HSBC pointed out in the report that, in addition to traditional geopolitical risks (such as the Ukraine war, US-China competition, and Middle East conflicts), the swelling fiscal deficits in the Western world are becoming a hidden driver behind gold price increases. The US federal deficit is expected to reach $2.05 trillion in the 2026 fiscal year, about 6.5% of GDP. Such fiscal “extravagance” is eroding the credibility foundation of fiat currencies. The report stressed: "The growing fiscal deficits of the US and other countries are stimulating demand for gold, which may become a key factor in the future." When the market begins to doubt fiscal sustainability, gold’s appeal as a non-liability asset is infinitely magnified. Additionally, HSBC’s FX strategy team predicts the US dollar will weaken in 2026, providing solid bottom support for gold prices. Deutsche Bank Consensus: Strong Buying Reshapes Market Structure Deutsche Bank keenly detected a fundamental shift in market structure: pricing power for gold is shifting from price-sensitive consumers (such as jewelry buyers) to official sectors that are insensitive to price. As Deutsche Bank stated, "Price-inelastic buying by central banks and ETF investment demand are replacing price-sensitive jewelry consumption as the dominant force in the gold market." This structurally bullish market, dominated by central banks’ “hard demand,” means that buying remains strong even at high gold prices, as for central banks, gold is the ultimate hedge against “black swan” tail risks. Institutional Investors’ “FOMO” and Potential Volatility Though the long-term outlook is bullish, short-term trading may be fraught with hazards. HSBC noted that “fear of missing out” among institutional investors is partly driving the rebound in 2025, and such capital flows are easily reversible. The report warned: “If the expected rate cuts don’t materialize, the rebound could be suppressed and a correction may occur.” Current long positions on CME are at high levels and may be subject to profit-taking pressures at any time. HSBC believes the gold market in 2026 will feature “high volatility and high prices.” In an era of broken fiscal discipline and geopolitical fragmentation, $5,000 for gold is perhaps not just a price target, but a vote of no confidence in the current credit system. ~~~~~~~~~~~~~~~~~~~~~~~~ The above wonderful content is from Chase Trading Desk. For more detailed interpretations, including real-time analysis and frontline research, please join [Chase Trading Desk Annual Membership]. Risk Warning and Disclaimer The market has risks and investment requires caution. This article does not constitute personal investment advice and does not consider the individual users' specific investment objectives, financial situation, or needs. Users should consider whether any opinions, views, or conclusions in this article are appropriate for their specific circumstances. Investment is at your own risk.