HSBC has lowered its silver price forecast for this year because of weak Investor sentiment, it said.
Investor sentiment has been negative mainly due to the stronger dollar, which is up 25 percent against the euro since the start of 2014, although a reversal in the dollar may encourage demand, it said in a note on Monday.
It now sees silver averaging $17.05 per ounce in 2015, down from $17.65 previously, it said in a report on Monday, despite forecasting the global market deficit expanding to 87 million ounces from five million ounces previously.
“The impact of prices under $20 on primary mine output and investment, and the slowdown in gold and base metals production, lead us to look for a drop in 2015,” it said.
Mine production will drop to 850 million ounces this year from 878 million ounces in 2014 and will continue to fall due to a lack of investment into near-term mine supply, although that this ultimately prove supportive of prices.
On the scrap side, supply will drop to 155 million ounces from 169 million ounces, following years of rapid growth. Overall supply this year will be 1.025 billion ounces.
HSBC attributed the drop to the continued stagnation in prices – silver at around $16.20 per ounce is almost 70 percent below its all-time high of $49.81.
On the demand side, an increase in industrial demand to 564 million ounces and jewellery to 295 million ounces will underpin an increase in demand of four percent to 1.112 billion ounces, it said.
Silver industrial demand is largely influenced by the business cycle as well as new applications for silver and the underlying silver price.
Global industrial output will grow 3.2 percent this year, a slight decline from growth in 2014 of 3.3 percent. But most industrial silver is consumed in the emerging world; it forecasts growth in emerging markets a slightly better 4.1 percent.
The bank also lowered its average price forecast for 2016 to $17.65 per ounce from $20.50.
(Editing by Mark Shaw)
The post HSBC lowers FY silver price forecast to $17.05/oz appeared first on The Bullion Desk.
No comments:
Post a Comment