Meanwhile, concerns about US fiscal issues in this election year and the likelihood of a weaker USD and central banks demand are additional factors supporting gold prices, HSBC says. "We expect the gold rally to last into 2013, supported by solid investor demand and high commodity prices". However, HSBC team notes that weak jewelry demand and high scrap supply may limit gold's rally.
"We are lowering our 2012 average forecast to USD1,700/oz in light of price weakness earlier this year. But we are raising our average price forecasts for 2013 and 2014 to USD1,850/oz and USD1,775/oz, respectively", they say.