HSBC cuts avg Silver price forecast for 2014 from $20.80 to $19.50/Oz

HSBC forecasts silver prices to trade in a $17 to $22 range this year.

 

In addition to lowering its 2014 average price forecast to $19.50, it also reduced its 2015 price forecast to $19.25 from $20.25, but left its 2016 forecast at $21.50 and its longer-term forecasts unchanged at $25.

 

“Silver, like its sister metal gold, has traded defensively for much of the year, in a relatively narrow range. Silver has been negatively impacted by ongoing tapering by the Federal Reserve, a stronger USD (U.S. dollar), and a rotational shift out of hard assets. Equity market strength, in particular, has encouraged investor interest in the stock market and away from bullion, including silver,” said James Steel, analyst at HSBC.

 

There are three main price trends affecting prices in the rest of 2014, the bank said, overall rising supply, firm physical demand, but softening investment demand.

 

Rising supplies will likely cap rallies. Mine supply is expected to rise from both primary and by-product output. However, scrap recycling will be limited because of difficulties in collecting and low usage per unit. The lower silver prices may encourage new hedges, HSBC added.