Not optimistic about the rebound of the US stock market! HSBC envisions three scenarios for the future: each of which is favorable for gold prices!

HSBC believes that the adjustment in the US stock market is not yet over, and gold prices are expected to benefit and rise under three macro scenarios it envisions.

On March 31, HSBC released its latest research report stating, although market sentiment and positions have begun to move in the right direction, the adjustment in the US stock market is not yet over, and a rapid rebound in the short term is unlikely. The uncertainty surrounding tariffs will continue to exert significant pressure on the market.

HSBC outlined three possible macro scenarios: US economic recession, US stagflation, and economic growth slowdown accompanied by debt issues, all of which point to a common conclusion—gold prices will rise strongly, becoming the preferred hedging tool in investment portfolios over the coming weeks.

HSBC believes that the market adjustment has not yet bottomed out and advises caution regarding a rebound in US stocks. The current decline is mainly dragged down by large-cap stocks and cyclical sectors in the US, with US high-yield bonds also widening. Although some hard data in the US showed signs of recovery last week (such as durable goods orders), the notion that "it is merely a weakening of soft data and survey data" is highly misleading. From a fundamental perspective, the announcement of the tariff plan on April 2 is unlikely to mark the end of tariff uncertainty. On the contrary, this deadline may introduce more uncertainty, leading to further widespread weakening of leading indicators.

At the opening on Monday, risk aversion drove gold, the yen, and US Treasuries to rise successively. Among them, gold surged fiercely, with international gold prices breaking through the $3,100/ounce mark, rising more than $37 during the day, an increase of 1.22%.

Gold Prices Will Benefit Under Three Scenarios

The HSBC research report outlines three possible macro scenarios, all of which provide strong support for gold prices:

1. Concerns about a US economic recession: Classic US risk aversion, a weaker dollar, declining US Treasury yields, and falling risk assets, gold prices strengthen;
2. Concerns about US stagflation: US Treasury yields bottom out, unclear dollar trends, falling risk assets, gold prices rise significantly;
3. Economic data slows but accompanied by US debt concerns (due to the US government extending or further reducing taxes): US Treasury yields bottom out, a weaker dollar, falling risk assets, gold prices rise significantly.

HSBC believes that in the coming weeks, the dollar and US Treasuries/developed market sovereign bonds will lose to gold in portfolio hedging choices. It is noteworthy that gold prices have already reached new highs, and as the announcement of Trump's next round of tariff policies approaches, HSBC's precious metals analysts believe that gold prices are unlikely to see a significant decline.

HSBC analysis pointed out that the Atlanta Fed's GDPNow model further declined last week, even with the unusually large adjustment of gold import factors, this model now predicts negative growth for the first quarter GDP.

Hard data from other industries has also shown some signs of deterioration, such as the recent sharp increase in layoffs.

In this context, HSBC expects further room for adjustment in U.S. risk assets in the coming weeks— the market ultimately anticipates that the Federal Reserve will cut interest rates, possibly exceeding a 25 basis point cut in the next few meetings to address a potentially disorderly tightening of the financial environment