Gold's Recent Pullback Is A 'Golden Buying Opportunity', Say HSBC And Goldman

Under Trump's reciprocal tariffs, gold's status as a safe-haven asset has once again been highlighted.

Wall Street investment banks believe that the current combination of global trade war risks and geopolitical uncertainty will provide strong support for gold prices, making this pullback a potentially excellent buying opportunity.

Ask Aime: What is the current impact of Trump's tariffs on gold prices?

In their latest research reports, goldman sachs maintains its year-end gold price target of over $3,300, Deutsche Bank expects gold to reach $3,350/oz by year-end, and hsbc has raised its gold price forecast, predicting that central bank purchases and safe-haven ETF inflows will be the core drivers pushing gold prices higher. After briefly falling below the $3,000 mark, gold has already rebounded above this level.

Tariffs Pave the Way for Gold's Rise

According to Goldman Sachs' report, the impact of tariff policies on gold will be exerted in two ways: One is directly through tariffs on commodities like steel, aluminum, and copper; the other is coming from the rise in safe-haven demand due to global economic slowdown caused by tariffs.

Notably, the U.S. has excluded gold, copper, and energy commodities from the reciprocal tariffs. According to Goldman Sachs, although the U.S. has already imposed import tariffs on industrial metals like steel and aluminum—with potential expansion to copper-gold and energy are expected to remain exempt. This means the impact of tariffs on the gold market primarily stems from indirect channels: global economic slowdown and increased safe-haven demand.

Geopolitical Risks Continue to Simmer, Providing Structural Support for Gold

Beyond trade tensions, geopolitical risks are another major factor driving gold's strength. HSBC's research confirms that gold, as a safe-haven asset, performs exceptionally well during periods of economic and geopolitical uncertainty.

The banknotes in its report that gold is an extraordinary metal, and its recent surge above $3,000/oz is largely attributed to a combination of geopolitical risks and economic policy uncertainties, including the Ukraine conflict, Middle East tensions, shifts in U.S. foreign policy, and strained transatlantic relations.

Historically, gold broke through $1,000/oz during the peak of the 2008 financial crisis, surpassed $2,000/oz during the COVID-19 pandemic in 2020, and has now exceeded $3,000/oz amid escalating geopolitical and trade risks.

Goldman Sachs analysts are also bullish on gold, maintaining their year-end target of $3,300/oz and suggesting that risks are skewed to the upside, due to central bank purchases from emerging markets, rising ETF demand as the Fed cuts rates, and emerging recession fears.

Tariff Policies Also Impact Physical Gold Markets

The tariff policies have significantly affected the physical gold delivery market. Gold EFP (Exchange for Physical) is a mechanism that converts futures positions on the CME (Commodity Exchange) into physical gold accounts in London, playing a crucial role in maintaining market order.

According to HSBC's report, concerns over potential gold import tariffs have led to increased volatility in the EFP market. This has prompted the transfer of millions of ounces of gold from locations like London to CME warehouses in New York, significantly increasing CME inventories. Although gold currently appears exempt from tariffs, market uncertainty persists, and the EFP market may remain volatile until policies on gold import tariffs are clarified.

Central Bank Gold Buying: Driven by Safe-Haven and Diversification Needs

Since 2022, central bank demand for gold has surged, becoming one of the primary drivers of gold's rise over the past two years.

HSBC's report notes that central bank gold demand reached 1,082 tons in 2022 and 1,050 tons in 2023—significantly higher than the ten-year average of 455 tons.

Moreover, HSBC expects central bank gold purchases in 2025 to reach 925 tons, slightly lower than in 2024 but still historically high. The main constraint on further central bank buying is high prices rather than weakening safe-haven demand.

Goldman Sachs similarly believes that central bank purchases from emerging markets will continue to provide structural support for gold prices, especially amid heightened geopolitical risks and economic uncertainty.

Is the Pullback an Opportunity?

Goldman Sachs points out that gold's recent retreat from its all-time highs following the tariff policy announcement does not reflect a deterioration in gold's fundamentals but rather two factors: Investors unwinding gold positions to meet margin calls amid ongoing stock market declines, and their shift to other asset classes after the initial uncertainty over reciprocal tariffs subsided.

Therefore, Goldman Sachs explicitly views this pullback as a buying opportunity.

HSBC, meanwhile, suggests that gold's short-term trend remains upward and may persist until the second half of the year before a correction occurs. The bank has raised its 2025 average gold price forecast to $3,015/oz (previously$2,687/oz), with an expected annual trading range of $ 2,800 to $3,350.