Gold forecast: HSBC raised its 2013 forecast to $1,850/oz

HSBC cut its 2012 average gold price outlook for 2012, but raised its 2013 and 2014 forecasts on solid investor demand and high commodity prices.

The bank cut its 2012 price outlook to $1,700 per ounce from $1,760 in light of price weakness earlier this year and raised its 2013 forecast to $1,850 from $1,775. It also raised its 2014 price forecast to $1,775 from $1,750.

“We remain bullish on gold, and we expect prices to reach $1,900 an ounce by year-end,” HSBC chief commodity analyst James Steel said in a note to clients.

More From James Steel:

  • “Although the first rush of QE3-inspired gold buying is over, we believe that the Fed’s open-ended commitment to easing until U.S. labor markets improve will support gold well into 2013,”
  • Gold is often sought as a hedge against inflation and currency weakness at times of loose monetary policy. As such, the U.S. Federal Reserve’s recent announcement of a third round of quantitative easing has proved price-supportive for gold.
  • Despite trimming its 2012 average price forecast for gold–the result of weak prices earlier in the year–HSBC sees the metal reaching $1,900/oz by year-end. Next year, monetary easing should support gold prices near $2,000/oz, although sluggish physical supply and demand dynamics should prevent the metal from challenging that level, said Mr. Steel.

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