HSBC says gold has not worked as an equity hedge in 2026 because leveraged capital is crowded into it. The bank still expects gold to end 2026 higher, citing central bank buying and steady ETF inflows.
HSBC strategists report that gold has underperformed as a short-term volatility hedge this year. They expect the metal to rise by year-end all the same.
Margin calls undercut gold's hedge role
The bank says gold's correlation with the wider stock market grows as its role in trading markets grows. According to HSBC, with leveraged capital crowded into gold, tumbling stocks trigger margin calls that force investors to unwind positions to raise cash.
Because of this, HSBC analysts warned that although gold looks like a robust hedge against systemic risks, "it’s not guaranteed to work as a short-term volatility dampener". They added that using other diversifiers remains a sound strategy for investors.
Bullish view rests on central banks and ETFs
Gold prices are holding at a resistance level near $4,000 per ounce. Central banks have been amassing gold in 2026, and this demand provides a cushion for prices to hold at relatively higher levels.
HSBC still concluded that demand for portfolio diversification, central bank purchases and steady ETF inflows continue to support its bullish view on gold. The analysts said they expect gold to end 2026 at a higher price level. HSBC also said the debasement trade into hard assets can continue while concerns over debt and inflation linger.
Institutions predict gold could reach $6,300 per ounce in 2027, and economist Jim Rickards has suggested it could touch $10,000.
Source: Bitcoin News
Trading involves risk.
Risk Disclaimer
