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

HSBC believes that gold prices are expected to break through the psychological barrier of $5,000 per ounce in the first half of 2026.

According to news from the Chasing Wind Trading Desk, HSBC's Chief Precious Metals Analyst James Steel emphasized in a report released on January 8 that the fuel for this round of surge is no longer just traditional expectations of monetary easing, but a "volatile cocktail" mixed with geopolitical risks and fiscal deterioration. Previously, Deutsche Bank also significantly raised its average gold price forecast for 2026 to $4,450, believing that reaching the $5,000 mark is just around the corner. Although HSBC slightly adjusted its average price forecast for 2026, it has raised its long-term target prices for 2027 and beyond, showing the bank's strong optimism about a long-term bull market for gold.

For investors seeking refuge in "hard assets," these two reports are not only price forecasts but also cast a "vote of no confidence" on the current geopolitical landscape and the global credit monetary system. Although the chasing behavior of institutional investors may bring high volatility in the short term, the continuous inflow of official departments and long-term funds is building a higher bottom support for gold prices.

Fiscal "Addiction" and Geopolitical Chaos: The 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 rivalry, and Middle East conflicts), the increasingly expanding fiscal deficits in the Western world are becoming an invisible driving force behind rising gold prices. The US federal deficit is expected to reach $2.05 trillion in the fiscal year 2026, accounting for about 6.5% of GDP.

This fiscal "extravagance" is eroding the credit foundation of fiat currencies. The report emphasizes: "The increasing fiscal deficits in the US and other countries are stimulating gold demand, which could become a key factor in the future." When the market doubts fiscal sustainability, the appeal of gold as a non-debt asset is magnified. Coupled with HSBC's foreign exchange strategy team's prediction that the US dollar will weaken in 2026, this provides solid bottom support for gold prices.

Deutsche Bank Consensus: Rigid Buying is Reshaping Market Structure

Deutsche Bank has keenly captured the fundamental shift in market structure: the pricing power of gold is shifting from price-sensitive consumers (such as jewelry buyers) to price-insensitive official departments.

As Deutsche Bank stated, "The lack of price elasticity in central bank purchases and ETF investment demand is replacing the price-sensitive jewelry consumption demand, becoming the dominant force in the gold market." This structurally bull market driven by "rigid demand" from central banks means that even if gold prices are high, buying remains strong, as for central banks, gold is the ultimate hedge against "black swan" tail risks.

Institutional Investors' "FOMO" and Potential Volatility

Although long-term bullish, short-term trading may be fraught with risks. HSBC pointed out that the rebound in 2025 is partly driven by institutional investors' "fear of missing out," and this flow of funds can easily reverse. The report warns: "If the expected interest rate cuts do not materialize, the rebound may be suppressed and a correction may occur." The current CME net long positions are at a high level, potentially facing profit-taking pressure at any time HSBC pointed out that the gold market in 2026 will exhibit characteristics of "high volatility and high prices." In an era of fiscal discipline breakdown and geopolitical fragmentation, $5,000 may not only be a price target but also a vote of no confidence in the existing credit system by the market