FXStreet reports that strategists at HSBC believe more immediate-term downside is likely but the longer-term outlook remains positive for the yellow metal.

“Some of the risks (that had built into the market and propelled gold higher) came out of the market. Two outright bearish developments – a surging USD and jump in US Treasury yields – pulled the rug from under gold.”

“The psychological relief and a shift in risk sentiment may still weigh on gold in the immediate term.”

“The broader economic climate (such as high debt, likely defaults and vulnerable asset price declines) is still gold-friendly. The risk now is whether the pandemic worsens and how quickly a vaccine can be made available – assuming it does provide protection from COVID-19. The fiscal and monetary response to the pandemic globally will remain highly accommodative. A Democratic administration with the commensurate likelihood of bigger fiscal stimulus packages to come will likely buoy gold. All this should continue to provide gold with a reason to go higher in the medium to longer-term.”