The logic behind gold's rally has changed. It was once mainly driven by expectations of interest rate cuts, but now a combination of geopolitical risks and worsening fiscal deficits is taking center stage.

HSBC's chief precious metals analyst James Steel recently made a bold prediction: gold prices are expected to break through the psychological threshold of $5,000 per ounce in the first half of 2026. He described the current fuel for gold's rise as a "fiery cocktail"—a mix of traditional monetary policy expectations, geopolitical uncertainties, and concerns over deteriorating fiscal conditions in various countries.

Not only HSBC is optimistic. Deutsche Bank is also adjusting its expectations, significantly raising the average gold price forecast for 2026 to $4,450, believing that breaking the $5,000 mark is within reach. While HSBC slightly adjusted its average price forecast for 2026, it also sharply raised its long-term target prices for 2027 and beyond, signaling strong confidence in a long-term gold bull market.

This clearly makes gold more attractive to investors seeking safe-haven assets. In a time when economic and geopolitical risks are soaring, the importance of allocating to hard assets becomes even more evident.