NEW YORK (Reuters) - Europe’s biggest bank, HSBC Holdings (HSBA.L)(0005.HK) on Wednesday raised its 2009 gold price forecast to $925 from $875 an ounce on a combination of inflation-hedge demand, U.S. dollar weakness and stagnant mine output.
“Concerns that quantitative easing will lead to higher inflation have driven investor demand for gold,” said James Steel, chief commodities analyst at HSBC.
In May, Steel lifted his outlook for gold to $875 from $825 an ounce.
For 2010, Steel expected gold to trade at $950, up from his previous estimate of $875, and he also pegged his 2011 forecast at $825, up from his prior view of $725.
However, Steel cautioned that further gains could be capped by negative market fundamentals.
“Weak jewellery sales and ample scrap supply are freeing gold for investment, reducing the possibility that gold will sustain rallies over $1,000 an ounce,” Steel said.
Flat mine supply, low official-sector sales, and steady demand from the popular gold-backed exchange-traded funds should provide support at $850 an ounce, he added.
Spot bullion traded at $966 an ounce, up 10 percent year to date.
Steel also increased his 2009 price view for platinum to $1,175 from $1,100 an ounce as a modest recovery in auto sales should help tighten platinum balances as producers restrain output.
“Although still weak, global auto and industrial demand appear to be stabilizing. This, plus production cutbacks, should help tighten platinum group metals (PGM) balances,” he said.
Meanwhile, Steel kept his silver and palladium price outlook unchanged, at $12.50 and $225 an ounce respectively, citing abundant supply.
Reporting by Frank Tang; Editing by Marguerita Choy