July 9 (Reuters) - HSBC cut its average gold price forecasts for 2026 and 2027 on Thursday, citing a hawkish shift in U.S. monetary policy expectations and a stronger dollar.
The bank lowered its 2026 average gold price forecast to $4,560 per ounce from $4,864 and its 2027 forecast to $4,925 from $5,000. It said gold could trade between $3,800 and $4,700 for the rest of 2026 and end the year at $4,750, while its 2027 year-end forecast was $5,025.
Spot gold was trading around $4,100 as of 0730 GMT,
down more than 20% from the record $5,594.82 hit on January 29, as the Middle East conflict stoked concerns about inflation and prompted a more hawkish shift in the Federal Reserve's monetary outlook.
"Changing perceptions of U.S. monetary policy and the impact this had on the dollar are among the central reasons behind further gold liquidation and price declines," HSBC said.
HSBC said central bank buying had moderated after helping drive gold's rally in recent years, though long-term diversification could still support prices.
Heavy exchange-traded fund outflows seen in the first half may partly reverse in the second half, it added.
Despite the cuts to forecasts, HSBC said downside risks might be limited as much of the market had already adjusted to a stronger-dollar, higher-rate environment.
The bank argued that some of the factors supporting gold before the Middle East conflict, including fiscal deficit concerns, economic uncertainty and sovereign debt burdens, remained in place.
The conflict still has the "power to send gold lower, but we do not believe Iran-related declines by themselves would be long lasting," HSBC said.
(Reporting by Pablo Sinha in Bengaluru; Editing by Subhranshu Sahu)
