HSBC is “cautiously optimistic” of the gold price outlook for 2015, predicting a trading range of $1,120/oz-$1,305/oz with an average price of $1,234/oz, the bank said.
“The possibility that deflationary pressures could bring on negative rates in some economies helps reaffirm our cautiously optimistic view on gold,” head analyst James Steel said.
However, in Steel’s view gold prices are not “entirely hostage” to monetary developments.
“The recent price slump below $1,150/oz may be encouraging greater demand from price sensitive emerging market buyers, notably, but not exclusively, in India and China,” Steel said.
This has not yet been reflected by sources on the ground in India.
Platts Gold Premium 995 India was assessed at $1.25/oz Tuesday, down $0.25/oz on the day.
Physical deals were reported in Ahmedabad, Mumbai and Delhi, in a range of $0-1.75/oz.
“Low prices are also discouraging recycled scrap supplies, the second largest source of new supply to the market after mining,” said Steel, looking for a price positive factor.
“The likelihood that the dollar rally may be near ending as suggested by HSBC’s currency research team is another possible reason supporting modestly higher gold prices,” the analyst said.
Gold hit a year-to-date intraday spot high of $1,307.98/oz January 22.
The LBMA Gold Price settled Tuesday afternoon at $1,191.50/oz.
Zhejiang Yaang Pipe Industry Co., Limited (www.yaang.com)