14 Jan 2014
Flash: Gold to recover some lost ground in 2014 - HSBC
FXstreet.com (Bali) - Gold should recover modestly this year, according to HSBC, with an estimated wide trading range of USD1,390/oz to USD1,105/oz for 2014.
Key Quotes
"We expect monetary policy – especially as it influences the USD – will be key in helping to shape and determine gold prices this year. Tapering expectations helped trigger a near stampede out of gold in 2013 and it is reasonable to say that some form of tapering has already been factored into prices. That said, it is likely that further tapering would have a second-round negative impact on gold prices. These declines should be much more restrained than the plunge in prices in the first half of 2013."
"Much will depend on the pace and timing of the tapering the Fed decides on and economic conditions going forward. If, as HSBC foreign exchange research anticipates, the Fed tapers decisively this year, in the midst of a solid economic rebound, then the USD is likely to rally and pressure gold. This is the most likely scenario and the one on which we base our expectations for a weaker gold price in the near term. If the Fed shies away from further tapering then gold may receive some modest support. Alternatively if the Fed opts for a slow, modest taper and the economy fails to rebound we would expect gold to be buoyed. Under a disaster scenario in which the economy reacts badly to tapering we would expect subsequent USD weakness to boost gold."
"Tapering combined with a stronger USD creates a climate, in our view, for lower prices in 1H 2014.Without significant investor interest, gold’s upside will be limited. It will be hard to generate any such interest if the Fed continues a tapering policy. That said, gold prices will not be entirely determined by USD direction and Fed policy and we expect tight supply and strong physical demand to rally gold modestly, later in the year."
Key Quotes
"We expect monetary policy – especially as it influences the USD – will be key in helping to shape and determine gold prices this year. Tapering expectations helped trigger a near stampede out of gold in 2013 and it is reasonable to say that some form of tapering has already been factored into prices. That said, it is likely that further tapering would have a second-round negative impact on gold prices. These declines should be much more restrained than the plunge in prices in the first half of 2013."
"Much will depend on the pace and timing of the tapering the Fed decides on and economic conditions going forward. If, as HSBC foreign exchange research anticipates, the Fed tapers decisively this year, in the midst of a solid economic rebound, then the USD is likely to rally and pressure gold. This is the most likely scenario and the one on which we base our expectations for a weaker gold price in the near term. If the Fed shies away from further tapering then gold may receive some modest support. Alternatively if the Fed opts for a slow, modest taper and the economy fails to rebound we would expect gold to be buoyed. Under a disaster scenario in which the economy reacts badly to tapering we would expect subsequent USD weakness to boost gold."
"Tapering combined with a stronger USD creates a climate, in our view, for lower prices in 1H 2014.Without significant investor interest, gold’s upside will be limited. It will be hard to generate any such interest if the Fed continues a tapering policy. That said, gold prices will not be entirely determined by USD direction and Fed policy and we expect tight supply and strong physical demand to rally gold modestly, later in the year."