HONG KONG(BullionStreet): HSBC, one of the world's leading global banks, upgraded it's 2013 silver price forecast to $33 an ounce.
The projections are higher than the earlier estimates of $32 per ounce. The bank said the upward projection is reasoned with stronger investor appetite and industrial growth.
However, the bank retained 2014 silver price forecast at $31 an ounce.In the final quarter of 2012, silver prices declined by almost 13% to close the year at $30.34 an ounce.
Analysts said this could be a positive sign for market players to add more silver to their portfolios. The revision of silver prices forecasts for 2013 and 2014 is based on a variety of reasons.
Though there are four major drivers, which inspired the forecast update. The factors are: steady investor appetite for hard assets, higher industrial demand, bottoming out of jewelry demand and strong coin and bar purchases.
HSBC sees the aggression monetary easing of several central banks worldwide as single most important factor. Last year, the white metal rallied on hopes for further stimulus measures. This year, we can expect the same scenario to take place.
Projections for silver-backed ETFs are also higher. That is because the ongoing stimulus setting sets good climate for hard assets demand. With negative and unstable data constantly popping up in the news, it is highly unlikely that central banks around the world will stop buying precious metals soon.
Almost half of the total physical consumption goes to industrial usage. Therefore, stronger demand from that sector is seen as a serious reason for higher silver prices. In 2011, the industrial demand rebounded, while a year later it took a dip.
However, HSBC sees a vivid recovery in 2013. Expectations are on the back of growing industrial output in some of the key silver consumer economies.
Countries such as China, South Korea, Taiwan and Indonesia share considerable manufacturing expansion estimations. The bank said growing worldwide desire to buy luxury goods should propel the silver jewelry appetite this year.
Higher jewelry demand expectations are based on continued growth in China. World’s largest importer of silver, India, is also projected to back up the metal.
Last year Indian authorities hiked import tariffs on gold and silver. In 2013, budget proposed additional tariffs on gold. Another important component of the silver market is coins and bars trade.
In 2012 the market for physical silver bars and coins declined. Since the beginning of the 2013, however, the bullion data has improved. Demand is projected to stay firm till the end of 2013.
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