HSBC said Wednesday it looks for gold prices to hit $1,900 an ounce by year-end.
"The Federal Reserve's third round of asset purchases via quantitative easing (QE3) and other central banks' policy easing measures are measurably boosting gold-investment demand," the bank said in an updated forecast. "For investors who expect QE3 will fail to jump-start economic growth, gold offers an attractive quality asset. For investors concerned about the inflationary impact of QE3, gold appeals as an inflation hedge."
Concerns about U.S. fiscal issues and the likelihood of a weaker U.S. dollar are additional factors supporting gold, the bank said. It also cited continuing central-bank demand that accounted for 456 metric tons in 2011. HSBC said it looks for reserve managers to purchase an additional 450 tons this year and 425 tons next year.
The bank said there are some "sluggish" supply/demand factors, including weak jewelry demand, low Indian bullion imports, rising scrap supply and limited retail coin and small-bar demand. This has the potential to "constrain—but not reverse—the long-running rally," HSBC said.
The bank lowered its average forecast for full-year 2012 to $1,700 an ounce to reflect price weakness earlier this year. Its previous forecast had been $1,760.
However, HSBC upped its average forecast for 2013 to $1,850 from $1,775, listing a potential range of $1,550 to near $2,000. It also upped its 2014 forecast to $1,775 from $1,750. . .View Full Article