 The gold price is being pulled in two
different directions: ETF outflows abated,
mine output plateauing, scrap down…
 …but weaker physical demand, low
inflation and growth, and USD gains are
likely to cap any strength  
 Price forecasts unchanged; we update
our supply/demand 2014 forecasts,
introduce 2015 forecasts  
Gold price outlook and forecasts
Gold is searching for a new equilibrium after last year’s price
plunge, which ended the more than decade long bull run. The
massive gold-exchange-traded funds (ETFs) outflows of 2013 –
which were instrumental in driving prices lower – have largely
abated. Another positive is that net long positions on the Comex
are rebuilding. Other factors supporting prices are that mine
production gains are plateauing, scrap supplies are down and
central bank demand is steady.  
By contrast, USD strength, as forecast by HSBC forex research,
is likely to weigh on gold or create headwinds to further rallies.
The tapering of asset purchases in the US and low global
growth and inflation rates discourage a return of institutional
investment but are well known and factored in by the market.     
That leaves physical demand. Jewelry, coin and bar demand are
down double-digit percentages this year, as key bullion import
markets in China and India have softened. But the comparison
is misleading because last year was a record. Long run
economic and demographic trends argue for increasing
emerging market bullion demand. Near term gold consumption
would likely be stimulated by any decline in prices to or below
the USD1,200/oz level, we believe.   
These factors largely balance out so we are leaving our price
forecasts unchanged. We see a broad price range of
USD1,150-1,350oz for the remainder of this year, with an
average price for 2014 of USD1,292/oz.. We update the 14
components of our supply and demand forecasts for 2014, and
introduce 2015 forecasts to our model.