HSBC Lifts 2013 Gold Price Forecast on Physical Demand

September 13, 2013 at 10:46

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HSBC Global Research raised its 2013 gold price forecast and said physical demand is becoming a major driver for the yellow metal. The bank lifted its gold price outlook for this year to USD 1,446 per ounce from USD 1,396, and kept its 2014 forecast unchanged at USD 1,435 an ounce.

“Physical demand for jewelry, coins, and bars from China, especially, are supportive and becoming a key driver,” HSBC said in a note on Thursday. The bank said investment demand for gold will remain weak as gold’s use as a safe haven ebbs.

Expectations that the US Federal Reserve will reduce stimulus measures will continue to weigh on the gold market, HSBC said. “We expect gold’s near-term direction to be highly data dependent and is likely to be volatile.” The prospect of a stronger US dollar as a result of Fed tightening is likely to present headwinds to further gold rallies, the bank said.