On Monday, HSBC revised its outlook on gold prices for 2013 and 2014, but reiterated its bullish view on the yellow metal.
The bank cut reduced its average gold price forecast for this year by 3.4% to $1,700 a troy ounce. For the next year, it trimmed the price outlook by 3.1% to $1,720.
HSBC’s forecast shift reflects gold’s lackluster price performance so far in 2012. HSBC analyst James Steel told reporter that this is driven by growing expectations that the U.S. Federal Reserve may curb its gold-supportive quantitative easing program sooner than expected.
However, this is rather a short term perspective. In the long term, gold remains class asset and the bank expects the trend to remain bullish.
This is due to many supportive factors, including rising global liquidity. For example, the Bank of Japan ramped up quantitative easing, rising inflation expectations, currency depreciation and geopolitical tensions.
Gold tends to be sought as a store of value at times of economic insecurity, currency debasement and deflation. And in no means, the global financial crisis is resolved or it would be resolved this year or in 2014.
Another supportive factor for gold prices is the improving demand for gold exchange-traded funds, ongoing central bank demand and strong jewelry demand.
