Following a dramatic couple of weeks for those holding gold, HSBC has told clients the precious metal is ‘bound to rebound’ and that they could use the losses as a buying opportunity.
Citing hopes that unease over loose monetary and fiscal policies will rekindle the rally for gold , James Steel, an analyst with HSBC in New York said ‘buy’ as he raised his short term price target to $1,525 an ounce.
“Gold prices have retreated from record highs. But they should remain buoyed by investor concerns about the global economy, geopolitical risks, high commodity prices, easy monetary policies, and fiscal profligacy”
“Increased mine output, ample scrap supplies, and moderate jewellery demand are freeing up metal for the investment sector” said Steel in a research note on Tuesday.
The bigger loser in the precious metal space has been silver and Steel is not as bullish as he is on gold.
“Prices have corrected sharply from 31-year highs near $50 an ounce. Higher mine and scrap supplies are being absorbed by robust industrial off-take”
“Investors have favoured silver and coin sales, but prices appear high, especially relative to gold” said Steel