LONDON: HSBC and metals consultancy GFMS both said they see gold rising above $2,000 an ounce, citing high government debt levels and instability in the currency markets, even as spot prices slipped back below the $1,800 mark.
HSBC lifted its 2012 gold price forecast to $2,025 an ounce from $1,625 previously, while GFMS said it could “easily” see gold spiking through $2,000 an ounce by the end of this year
Gold has been trading choppily in a broad range since the Swiss National Bank said it would take steps to tackle the Swiss franc’s strength versus the euro, unsettling financial markets. It fell as much as 2 percent on Thursday.
Nonetheless, both GFMS and HSBC said the outlook for the precious metal, which earlier this month hit a record high above $1,920 an ounce, was positive in the longer term.
“We believe gold’s 10-year bull market remains firmly intact, despite high volatility, with prices up 29 percent already this year,” said HSBC in a note.
“The euro zone debt crisis, currency wars, and deep uncertainty among investors are among the factors driving prices higher.”
The bank also raised its 2011 gold price forecast to $1,630 per ounce from $1,590, and its 2013 gold price forecast to $1,850 per ounce from $1,550. It said investor demand was the dominant factor that was driving up prices.
“Gold is benefiting from growing investor anxiety about ineffective government policies, unsustainable government debt levels, and the potential for a further global slowdown,” it said.
GFMS also identified a recovery in investment demand, which was weak in the first quarter of the year, as a key factor driving gold prices higher. Bar demand, central bank buying and jewelry offtake have all been firm this year, it said.
A recovery in investment could push prices above $2,000 an ounce by the end of this year, it said.
“We expect a major increase in world investment in the second half of this year,” it said in its updated Gold Demand Trends report released Thursday.
“While short term sentiment has been driven by fears about a double-dip recession, it is arguable that the prospect of inflation should be as much of a concern.”
Sovereign debt concerns are also likely to resurface later in the year, it said.
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