XAU/USD: Gold could be firm even if the equity market is strong – HSBC

Analysts at HSBC  point out that in the current climate, gold may rally even if the US dollar goes up, and could be firm even if the equity market is strong.

Key Quotes: 

“Gold may have received some support from plans for increased fiscal spending, but the underlying support is based on lingering uncertainty, according to our precious metals analysts.”

“Our precious metals analysts think that this uncertainty that has so far benfitted gold, will continue, as some investors may take on gold positions as insurance or a hedge against another economic downturn or equity pullback. In addition, geopolitical risks are also positive for gold, especially if they negatively impact trade. In the current climate, gold may rally even if the USD goes up (as both attract “safe haven” and quality asset buying, like what has happened since the onset of COVID-19 and during the 2007-08 global financial crisis). According to our precious metals analysts gold could be firm even if the equity market is strong.”