Synopsis:
HSBC argues that gold is positioned for further near-term upside, with tariff tensions escalating into what may become a full-blown trade war. While FX markets remain indecisive, gold has become the primary beneficiary of safe-haven flows, and HSBC sees little reason for a pullback ahead of the April 2nd US tariff announcement.
Key Points:
1️⃣ Gold Reacting More to Tariff Risk Than Currencies
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Gold is showing greater sensitivity to tariff headlines than FX markets.
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USD has not rallied on risk aversion, but gold has — a sign of diverging safe-haven flows.
2️⃣ Tariff Confusion Supports Gold’s Appeal
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FX markets may be confused by "mutually assured damage" in a trade war — if all currencies suffer, gold becomes the relative winner.
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A tit-for-tat tariff escalation is seen as inflationary and growth-negative, which is gold-positive.
3️⃣ USD-Gold Co-Rally Possible
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HSBC notes that both USD and gold can rally simultaneously in risk-off periods — so even if the USD firms, it may not cap gold’s upside.
4️⃣ Gold Market Fundamentals Remain Supportive
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ETF holdings are rising, signaling continued investment demand.
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No major signs of market tightness due to elevated NY warehouse stocks, but this hasn’t hindered prices.
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Low trading volume suggests speculators may not be driving the move — supportive of a more strategic, sticky bid.
Conclusion:
With uncertainty rising ahead of the April 2nd tariff announcement, HSBC sees no compelling reason for gold to fall. Instead, they expect continued strength, especially as investors seek clarity and safety amid a murky FX landscape. Gold remains the "unambiguous safe haven" of choice.
