HSBC: Gold Could Fall Further If Next FOMC Statement More Hawkish Than Expected

London (Sept 10)  HSBC sees potential for gold to ease some more if a statement from the Federal Open Market Committee next week should be more hawkish than expected. The metal hit a three-month low on Tuesday, which HSBC attributes to a reassessment of U.S. interest rate expectations following a recent Federal Bank of San Francisco report. HSBC says the report suggests investors may be underestimating how quickly policy-makers could raise rates. HSBC’s U.S. economic outlook is for growth in U.S. gross domestic product to average 2.5% in the second half and for full-year 2015, with the forecast for next year below consensus estimates. Still, HSBC sees potential for the Fed to start hiking in June 2015 as the labor market improves, forecasting a jobless rate of 5.5% by the end of 2015. HSBC economists expect the FOMC to unveil a new exit strategy at its Sept. 16-17 policy meeting. “While bullion prices at current levels reflect, to an extent, expectations for tighter monetary policies, it does not preclude prices from falling further should the upcoming FOMC statement be viewed as more hawkish than anticipated, in our view.”

Source: KitcoNews