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HSBC Gold Outlook: Bearish Factors May Not Be So Bearish In 2015

By Sarah Benali of Kitco News
Thursday January 15, 2014 2:01 PM


(Kitco News) - Although many bearish factors for gold seem to be on the horizon in 2015, HSBC said they see potential gains for the metal in the coming year.

The yellow metal is already off to a good start; Comex February gold futures are currently trading at $1,264.10 an ounce, up more than 6.7% since the start of the year.

In its Gold Outlook report released on Wednesday, the bank said they expect gold prices to average around $1,234 an ounce and laid out a few bullish factors for the metal this year, some of which were bearish for gold just last year.  

“Gold prices were weighed down by USD strength in 2014,” noted analysts James Steel and Howard Wen in the report. “But the possibility that further USD gains will negatively impact financial markets this year raises the possibility that investors will seek out gold as a safe haven,” they added.

According to the report, other factors – global monetary policies, inflation levels, and foreign exchange movements – which have been bearish for gold lately may also prove to help support gold prices this year.

“Firstly, the gold market appears to have largely digested many of these factors,” they said, adding that demand for gold will be on the rise, not only from emerging markets but also from central banks.  

“Central bank policies, once established, tend to be long-lived, and the pendulum has swung decisively toward gold accumulation,” they said.

As the investment environment improves, investor demand is also expected to grow in 2015, according to HSBC.

“We believe [exchange-traded fund] investor liquidation is coming to an end and we look for gains in gold ETF holdings in 2015,” they said. “Comex net long positions are also rebuilding and are likely to support prices.”

Finally, gold supply could prove to boost the metal’s price this year, said HSBC.

“We anticipate tighter gold supply in 2015. This is mostly due to lower scrap supply but also because we believe mine supply, after a decade of increases, is flattening out,” the report said.

“These factors largely balance out and we see the potential for gold price gains this year.”

By Sarah Benali of Kitco News sbenali@kitco.com
Follow me on Twitter @SdBenali



Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in precious metal products, commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.
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