Gold’s rally will likely ease further

Investing.com – Gold’s rally is starting to look like it has stalled, HSBC said, and the precious metal could soften further unless there is a severe escalation in geopolitical risk.

rose to a record high of $2,685.42 an ounce on September 26 and has gained about 28% so far this year – on its way to its biggest annual gain in 14 years – fueled by the start of interest rate cuts at the Federal Reserve from the US and geopolitical tensions.

However, the lack of a response so far on Thursday to events in the Middle East may indicate that the gold market is getting slightly bullish on news from that region.

At the moment, however, more “haven” buying appears to be going to the US dollar than to gold, analysts at HSBC said in an Oct. 2 note.

“Gradually, the case for 50 basis point cuts by the end of the year is outpacing expectations of 75 basis point cuts. This could weigh on gold,” HSBC added. “Fed Officials’ Comments May Have Additional Meaning.”

The next major piece of data, the September release, 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.

However, apart from that, gold could head slightly lower as China – a major buyer – remains out of the market, the bank added.