Gold prices will rebound remarkably from their current levels of about $1,388 per ounce to $1,600 per ounce by 2014, according to a top HSBC Holdings PLC (NYSE:HBC) gold analyst.
James Steel, HSBC’s chief commodities analyst, told Bloomberg in the audio interview that gold could average at $1,542 per ounce later this year and rocket up to $2,000 per ounce in the long term.
Steel cited high demand for gold bars and coins from China and “extraordinary” physical demand from emerging markets as key factors.
In recent weeks, gold prices have struggled to stay above the key threshold of $1,400 per ounce ever since a steep April decline.
Steel said the flight away from gold by important investment funds has slowed considerably, with the worst trends in outflow from exchange-traded funds, or ETFs, dying down for now.
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“As income rises throughout the emerging world, and despite the slackening growth recently, we’re still projecting ... greater growth over the next five to 10 years,” Steel told Bloomberg. “This is going to create a lot of retail demand for gold.”
The World Gold Council, which tracks gold sales worldwide, doesn’t speculate about future gold prices.
But spokesman David Schraeder hinted that there were significant sales of gold in the latest financial quarter, after the abrupt April price plummet.
“We can point to demand trends, and we certainly saw a huge wave of buying that happened in the second quarter, following that [April] price drop,” Schraeder told the International Business Times. “We look forward to sharing the quantified data.”
The next Council report on gold sales is due in August.
Asian demand for gold is expected to hit record highs on the back of strong consumer appetite in China and India, Reuters reported earlier.
An earlier quarterly Council report from mid-May noted a record high for jewelry demand in China, alongside the first rise in demand for gold jewelry in the U.S. since 2005.
Steel isn’t alone in his remarks about steep imminent rises in gold prices.
Top gold analyst John Hathaway, from the Tocqueville Gold Fund (MUTF:TGLDX), told the King World News blog on Thursday that gold prices could increase very suddenly by more than $1,000 per ounce. “I think we will see gold ignite in the second half of this year if not sooner,” he said.
“My message is that investors have to be positioned, despite the pain, in order to capture the repricing of gold, which could be very, very sudden,” he said. “And I’m not talking about $100. I’m talking about another $1,000 on the upside.”