By Glenys Sim
Aug. 6 (Bloomberg) -- Gold may average $925 an ounce this year on increased demand for haven investments as the global economy faces “formidable structural challenges,” according to HSBC Securities.
The forecast is 5.7 percent higher than an earlier target of $875 an ounce, the bank said in a report yesterday. HSBC raised its 2010 estimate for the metal by 8.6 percent to $950 an ounce and its 2011 target by 14 percent to $825.
“Gold prices will be subject to a myriad of competing forces, including strong investor demand, potentially volatile commodity prices, weak jewelry demand, sluggish mine output, and heavy scrap sales,” New York-based analyst James Steel wrote in the report. “The interplay between these forces will likely keep gold in a wide and volatile trading range.”
Gold for immediate delivery has averaged $919.88 an ounce this year and traded at $963.95 at 10:11 a.m. in Singapore. The metal has re-established its inverse relationship with the dollar, which will be another price driver, according to Steel.
Bullion has advanced 9.3 percent this year as the U.S. Dollar Index, which tracks the value of the greenback against the currencies of six major trading partners, slid 4.6 percent in the same period. Gold tends to move opposite to the dollar as investors seek a store of value and as it becomes cheaper for holders of other currencies.
HSBC Securities kept its silver forecast unchanged at $12.50 an ounce this year, $14 an ounce in 2010 and $13.50 an ounce in 2011. Silver has averaged $13.2705 an ounce this year.
Platinum Forecast
The company raised its platinum target by 6.8 percent to $1,175 an ounce this year and kept its 2010 and 2011 estimates at $1,500 an ounce and $1,475 an ounce, respectively. The metal, used mainly in catalytic converters, is up 38 percent this year, averaging $1,116.89 an ounce so far.
“Although still weak, global auto and industrial demand appear to be stabilizing,” wrote Steel. “This, plus production cutbacks, should help tighten platinum group metal balances.”
Jewelry consumption was likely to decline as the economic slowdown reduced demand for luxury goods, Steel said. China demand should “largely offset” losses elsewhere, he said.
Palladium forecasts were left unchanged at $225 an ounce for 2009, $315 an ounce for 2010 and $325 an ounce for 2011.
To contact the reporter on this story: Glenys Sim in Singapore at gsim4@bloomberg.net
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