HSBC Asset Management Warns Gold May Not Cushion Equity Sell-Offs

HSBC Asset Management says gold's recent price action shows it may not protect portfolios during stock declines, as leveraged investors can be forced to sell when margin calls arrive.

Gold traded above $5,000 per ounce earlier in 2026, then fell as volatility rose, the firm wrote in an Oct. 16 commentary. It linked the metal's vulnerability to the way investors may respond when equity losses put pressure on positions financed with borrowed money: margin calls can push them to sell gold to raise cash.

The firm said central bank reserve diversification and worries about debt and inflation continue to support gold's strategic role in portfolios. In an August analysis, HSBC Asset Management described gold's performance during major market shocks as mixed and its relationship with stocks and the U.S. dollar as unstable.

Treasuries responded differently during a technology-led market decline. In an Oct. 23 update, HSBC Asset Management said U.S. government bonds gained during the prior week's sell-off tied to artificial-intelligence stocks, with yields falling sharply across the curve.

The two episodes show how an asset's defensive role can depend on what is driving a market decline. HSBC Asset Management also warned that inflation shocks remain possible and advocated using several diversifiers instead of depending on one.