For gold, unease about monetary andfiscal policies should rekindle the rally;supply is likely to rise modestly
For silver, strong industrial demand anda recovery in investor appetite shouldoffset mine and scrap supply growth
Industrial demand is boosting PGM off-take; ETFs hold sizeable metal; erodingRussian stocks may buoy palladium
We are raising our average price forecasts for gold, silver,and the platinum group metals and introducing forecastsfor 2013
(see the table below). The bull markets remainessentially intact for gold and the PGMs, and although silver ispriced closer to its equilibrium value, its near-term bias isupward, in our view.
Prices have retreated from record highs. But they shouldremain buoyed by investor concerns about the global economy,geopolitical risks, high commodity prices, easy monetarypolicies, and fiscal profligacy. Increased mine output, amplescrap supplies, and moderate jewelry demand are freeing upmetal for the investment sector.
Prices have corrected sharply from 31-year highs nearUSD50/oz. Higher mine and scrap supplies are being absorbedby robust industrial off-take. Investors have favored silver andcoin sales, but prices appear high, especially relative to gold.
Moderating growth in auto demand and robustindustrial off-take are offsetting slow growth in mine supply.Platinum jewelry demand is moderating. PGM ETFs holdconsiderable amounts of metal. Widespread belief that Russianstockpiles are near exhaustion supports palladium prices.
HSBC precious metals average price forecasts (USD/oz)___2011_______2012_______2013____Long term__OldNewOld New Old NewOldNew
Gold 1,4501,5251,300 1,500 — 1,4501,0501,250Silver 263420 29 — 241520Platinum 1,7501,8501,650 1,750 — 1,6501,6001,625Palladium 750825650 750 — 725600700
Bound to rebound; raising our priceforecasts
10 May 2011
Issuer of report: HSBC Securities (USA) Inc.
Disclaimer & Disclosures
This report must be read with thedisclosures and the analyst certificationsin the Disclosure appendix, and with theDisclaimer, which forms part of it