HSBC: Gold falls below $4000, may remain under pressure until oil prices or stocks stabilize

What does HSBC think after gold fell below $4000?

Gold extended the previous day’s US-session losses during Asian and London trading, briefly falling below $4000 an ounce but remaining above its low for the year of $3950 an ounce. It then returned above $4000 in US trading before falling below that level again.
HSBC says high oil prices and falling global equities are both weighing on gold; the metal could continue to decline until at least one of those pressures eases. The bank also notes that the market is becoming increasingly oversold.

Concerns about an escalation of hostilities in the Persian Gulf pushed oil prices higher, with Brent crude rising above $117 a barrel, its highest level since April. HSBC says gold will struggle to rebound if oil prices remain high ahead of the US midterm elections.
A sell-off in AI and technology stocks spread to global equities, and equity-related liquidations also affected gold. HSBC observed that gold falls when equities decline even if the dollar weakens; gold ETFs have also turned sellers.

HSBC says more active central bank gold purchases could help stabilize prices: the official sector increased purchases earlier this year when gold was near $4000 an ounce. Other central banks with sufficient foreign exchange reserves may also increase purchases.
The Reserve Bank of India is typically a gold buyer, but its foreign exchange reserves fell to $721.2 billion in the week ended 16 October, down $5.01 billion from the previous week; declining reserves could restrain it from buying the dip in gold. HSBC believes gold could continue to fall in the near term if central banks do not step in or Chinese buying does not increase.

Silver weakened alongside gold and approached its low for the year, but physical buying in India increased significantly ahead of Diwali, which HSBC says could help halt further declines.
Platinum group metals were also weighed down by gold’s decline, but buying by Chinese traders and automakers increased end-user physical demand. HSBC expects platinum group metals to stabilize even if gold weakens further.