Gold to reach $1,900/oz by year-end – HSBC

A HSBC analyst team is remaining bullish on gold and expecting prices to reach $1,900/ounce by year-end. The third round of quantitative easing and other central banks' policy easing measures are boosting the demand for metals, which will cause their prices to continue to increase.
Posted 10/17/2012 8:36 AM
NASDAQ (Córdoba) - HSBC analyst team remains bullish on gold, and they expect prices to reach USD1,900/oz 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", they explain. "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".

Meanwhile, concerns about US fiscal issues in this election year and the likelihood of a weaker USD and central banks demand are additional factors supporting gold prices, HSBC says. "We expect the gold rally to last into 2013, supported by solid investor demand and high commodity prices". However, HSBC team notes that weak jewelry demand and high scrap supply may limit gold's rally.

"We are lowering our 2012 average forecast to USD1,700/oz in light of price weakness earlier this year. But we are raising our average price forecasts for 2013 and 2014 to USD1,850/oz and USD1,775/oz, respectively", they say.

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