LONDON, Aug 09, 2011 (Dow Jones) -- HSBC Bank has raised its gold forecasts for the next several years, as well as raising its 2011 gold forecast to $1,590 a troy ounce, a hike of 4.2% from $1,525/oz previously.

The bank said Tuesday it expects the precious metal to be volatile for the rest of the year and trade up to $1,850 a troy ounce. It also raised its 2012 forecast by 8.3% to $1,625/oz, its 2013 forecast by 6.8% to $1,550/oz, and its long-term gold price average by 10% to $1,375/oz.

"If history is any judge, the decade-long gold rally will not end until sovereign risks--in and outside of the U.S.--recede," said HSBC analyst James Steel. "This is unlikely to occur until the U.S. fiscal situation is on a sustainable path, the U.S. budget deficit is reduced, and progress is made on reducing the growth in the debt-to-gross domestic product ratio," he added.

Steel said any further decline in investor confidence regarding monetary and fiscal policies is likely to translate into even higher gold prices.

The bank also raised its silver price forecast for 2012 to $38/oz.