Investing.com -- HSBC analysts see multiple paths for gold to strengthen amid a US-driven market correction, citing economic concerns and policy risks as key drivers.

The bank outlines three scenarios where gold could benefit.

Firstly, U.S. recession concerns. They state that a traditional risk-off environment could lead to a weaker dollar, lower Treasury yields, and falling risk assets, all of which would support higher gold prices.

HSBC notes that in such a scenario, gold would be expected to perform well as a safe-haven asset.

Next is U.S. stagflation concerns. The bank tells investors that if the US economy faces both weak growth and persistent inflation, gold could see even stronger gains.

HSBC explains that under stagflation, “UST yields floored, USD inconclusive, lower risk assets, gold much stronger.”

Finally, U.S. debt concerns. HSBC believes that if the U.S. government pushes for further tax cuts or extends existing tax reductions, concerns over fiscal stability could weaken the dollar and push investors into gold.

“UST yields floored, USD weaker, lower risk assets, gold much stronger,” HSBC analysts wrote.

Unlike typical global risk-off events, HSBC describes the current correction as "really US-driven", highlighting that economic risks remain concentrated in US markets.

The bank also points out that Treasury yields and the dollar may not offer the same level of protection as gold in the coming weeks.

“We’d argue that both the USD and USTs/DM sovereigns will lose out against gold as the portfolio hedge of choice.”