HSBC’s Respected Steel Says Gold Over $1,600/oz In 2013

HSBC’s Respected Steel Says Gold Over $1,600/oz In 2013

Today’s AM fix was USD 1,379.75, EUR 1,035.54 and GBP 882.76 per ounce.
Yesterday’s AM fix was USD 1,386.25, EUR 1,039.71 and GBP 885.33 per ounce.

Gold fell $5.40 or 0.39% yesterday to $1,383.30/oz and silver and finished up 0.18%.
Gold is lower in most currencies today except sterling which has come under pressure.

Gold is lower in most major currencies again this week and very marginally lower in dollar terms – down 0.2% for the week. A lower weekly close would again be bearish technically and could signal further weakness.
GoldCore Market Performance Table

James Steel, chief commodities analyst at HSBC in New York continues to be constructive on gold in the medium and long term and sees gold rising to $1,600/oz in the second half of 2013.

In a Bloomberg audio interview, Steel said that this year the gold market has been under pressure and has experienced a rotational shift out of commodities in general driven by the constant chatter of a tapering off in QE and experienced very steep declines in mid April. He likens it to a rugby scrum pulling back and forth near the $1/400oz level, between ETF outflows and strong physical demand for coins and bars, notably from China.

Steel said that in the past few weeks the heavy ETF outflows have died down, and prior to this year they were mostly static. The peak for ETF's was 85M ounces at the end of last year. He says most institutions have already exited that wanted to get out.
Gold Adjusted For Inflation (CPI) 1970 to Today
Gold Adjusted For Inflation (CPI) 1970 to Today

Market chatter has been nervous about the unwinding of QE3. Steel points out that unwinding or paring back is very different than an exit. The Fed many need to do tapering for a long time before it ends their program.

Steel mentions that it was the jewellery market that drove the gold market in the past and now it is investment demand and demand from China. He believes gold will average is $1,542/oz and he is predicting a rally in the second half of the year up to $1,600/oz. Longer term, he is on record as saying that gold will rise to over $2,000/oz.

Steel has specific responsibilities for precious metals in HSBC and is one of the more astute analysts of the gold market working in the banks. He knows his financial, economic and monetary history.

ends

© Scoop Media