HSBC predicts $1,900 Gold before 2013


Precious Metals gave up early gains after the better than expected nonfarm payrolls report was released this morning. The gain of 163,000 jobs in July blew past the expectations of 100,000. However, the unemployment rate moved up to 8.3 percent, the highest since February. American stock futures added to gains on the news.

The economies that make up the eurozone continue to drag. After barely avoiding a recession in the first quarter of the year, Ben May of Capital Economics said the future may not be so kind to that region. “If you look at the breakdown by country, it suggests that recession is going to be pretty broad based, and it’s not purely down to developments in the (eurozone) periphery,” May said.

Analysts at HSBC believe that the upcoming “fiscal cliff” for the United States and the rest of the economic uncertainty in the world will push the Gold price to $1,900 by the end of 2012. The analysts wrote, “Economic uncertainty, geopolitical tensions, and the uncertainty of the U.S. November elections are theoretically gold bullish. … Patience is the most important commodity.” Staleness in Gold’s price can be attributed to a give and take in the markets, according to the report. “Periods of heightened eurozone concerns have typically led to equity markets selloffs, triggering margin call related selling in Gold as investors seek to raise cash.”

At 9 a.m. (EDT), the APMEX Precious Metals spot prices were:

  • Gold, $1,590.20, Up $1.90.
  • Silver, $27.23, Up $0.14.
  • Platinum, $1,392.20, Up $4.40.
  • Palladium, $575.50, Up $6.70.

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Gold Seeks Direction Amid Global Economic Woes

As the week comes to a close, two things stand out in the marketplace. First are the unexpected positive job reports in the United States. These reports have given life to the dollar and taken the steam out of Gold’s two week rally. Second, negative economic news continues to flow out of Europe and China. Both have cut key interest rates, and that could be a good sign for Gold’s global outlook. “While the ECB cut was near term bearish for Gold, as it weakened the euro, it may be more bullish longer term. Added global liquidity, with policy easing measures from the eurozone, China and the Bank of England, may stimulate demand for hard assets, including Gold,” HSBC financial services wrote in a note.

The United States has been improving steadily in many key economic factors. Employment reports have shown fewer Americans without work. The housing market has turned a corner and is making up lost ground. The issue is with the pace of the improvement. Even with the unemployment numbers dropping, it is such an insignificant amount that the overall percentage remained unchanged. “Growth has been low, and there remains uncertainty about the economy and policy here and abroad. All of those things are weighing on activity, but overall I’d put it on low growth in the U.S.,” said economist Andrew Tilton of Goldman Sachs.

At 9 a.m. (EDT), the APMEX Precious Metals spot prices were:

  • Gold, $1633.89, Down $21.48.
  • Silver, $28.02, Down $0.48.
  • Platinum, $1490.96, Down $25.89.
  • Palladium, $595.25, Down $7.71.
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