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Investing.com - Rallying gold prices may march higher in the near term, but physical and financial market factors could dent bullion by the end of 2025, according to analysts at HSBC said.
In a note to clients, the brokerage raised their target for gold prices this year to $3,215 per ounce, up from a prior forecast of $3,015/oz. For 2026 and 2027, the average price outlook was increased to $3,125/oz and $2,925/oz, respectively.
But the analysts flagged that they believe "the vast bulk of the rally has been put in, and that, while gold’s upward momentum may carry it higher, say in the near term, a combination of physical and financial market factors may tame the rally and weigh on gold by the end of this year."
Meanwhile, recently high prices of the yellow metal have encouraged an uptick in supply, but reduced demand for physical gold items like jewelry and coins, the analysts said.
"This may be key in restraining rallies and undercutting prices," they argued. "If risks are not sufficiently high to keep investors piling into gold, then the absence of underlying physical buying can ease prices."
Still, the strategists added that the likelihood of "seismic and possibly permanent shifts in the geopolitical landscape," coupled with financial market turbulence and the potential rise of "economic nationalism" in the guise of tariffs, could limit any pull back in gold prices.
Overall, they anticipate that gold will continue to stay "historically high."
On Tuesday, gold prices rose as uncertainty over U.S. trade negotiations ahead of President Donald Trump’s July 9 tariff deadline partially bolstered the metal’s safe-haven appeal. Weakness in the U.S. dollar, which has slumped to its worst start of a year since 1973, provided additional support.
Spot gold climbed 1.1% to $3,338.55 an ounce, while gold futures for August jumped 1.3% to $3,350.55/oz by 04:20 ET (08:10 GMT).
Bullion advanced by 1.5% a day earlier, and was set to cover most of the ground it lost last week following the announcement of a ceasefire in hostilities between Israel and Iran.