Author: Paul Ploumis17 Oct 2014 Last updated at 04:02:32 GMT

(Kitco News) -HSBC maintained its bullish outlook on platinum group metals but trimmed its price forecasts Thursday.

The bank described platinum as “oversold” after a decline in recent months, dragged down by weakness in gold and strength in the U.S. dollar.

“We maintain our bullish outlook on platinum but lower our price forecast by 6% in 2014 to average USD1,410/oz,” HSBC said. It revised its 2016 forecast to $1,505 from $1,700.

For sister metal palladium, HSBC left its 2014 forecast at $825 but trimmed its 2015 outlook to $855 from $900.

“We attribute the September sell-off to macro-inspired factors including a general decline in the precious metals commodities, a stronger USD (dollar), and concerns over China’s industrial demand,” said HSBC. “Despite these bearish factors, we maintain our bullish view and expect prices to rally from current levels.”

The most-active January platinum contract on the New York Mercantile Exchange settled Thursday at $1,251.90 an ounce, well down from the July high of $1,523. December palladium fell to a close of $746 from an early-September high of $913.

HSBC listed three main factors for its bullish platinum view, starting with ideas that industrial users will find current prices attractive. “The global auto market remains resilient and is the single largest driver of demand,” the bank said.

HSBC also cited expectations for improved jewelry consumption in China and suggested the impact on the supply/demand balance from a five-month strike in the key-producing nation of South Africa earlier this year has yet to be felt.

The bank revised its forecast for the 2014 platinum deficit to 1.804 million ounces and for 2015 to 897,000. For palladium, HSBC projected 2014 supply to be the lowest this century. The bank projected a supply deficit of 1.79 million ounces this year, followed by a 1.016 million deficit next year.

Courtesy: Kitco News