汇丰银行-全球-贵金属行业-黄金展望：暴风雨之后的阳光才更灿烂-2019.7.8-33页 (2).pdf

Disclosures&Disclaimer This report must be read with the disclosures and the analyst certifications in the Disclosure appendix,and with the Disclaimer,which forms part of it.Issuer of report:HSBC Securities(USA)Inc View HSBC Global Research at:https:/ Gold gains buoyed by shifting Fed policy and ongoing economic uncertainty,including trade and geopolitical risks ETF and Comex purchases lift prices,but open the risk of profit taking;EM buyers may put floor and ceiling on prices;coin and bar demand mixed;mine increases limited,but scrap is rising We raise our average forecasts to USD1,362/oz for 2019 and USD1,370/oz for 2020,from USD1,314/oz and USD1,345/oz Gold outlook Gold prices are benefitting from a shift in expectations towards potential stimulus from the Fed and other central banks.“Safe-haven”flows driven by economic uncertainty,and geopolitical and trade risks also offer support.The change in investor sentiment has been pronounced and gold has been able to maintain gains in the face of a strong equity market.Some of these bullish factors may already be digested by the market,however,which may moderate the pace of gains in 2H19.We believe gold is set to move higher in 2020 also,especially if the global economic and geopolitical outlooks remain uncertain.USD a headwind to rallies;Fed policy a plus The change in Fed policy towards a more dovish stance is prompting higher gold prices,as is the increase in negative yielding government debt globally.Expectations of Fed rate cuts will likely continue to support gold,but much of this may already be factored into prices and therefore be of diminishing bullish influence going forward.The main obstacle to further rallies is likely to be a firm USD.HSBCs FX view is for a stronger USD through 2019 and into 2020.The USD may present the greatest headwind to gains in the price of gold and at the very least will likely limit rallies,we believe.Investment will likely increase;physical demand improving Net long positions on the Comex are up sharply.ETF accumulation is also increasing at a brisk pace.While we look for further gains in both based on likely steady“safe-haven”demand,the rapid accumulation of longs leaves the market open to profit taking.Price sensitive emerging market demand,mostly for jewelry,was key in setting a floor on prices in 2018 and may play a reverse role this year,with diminished demand helping to cap gains on further rallies.That said,income gains should provide underlying support for jewelry offtake.Bar demand is sluggish but may steady,while coin sales continue to recover from very low levels.Strong central bank demand is playing a key role in buoying prices.Geopolitical risks,low gold holdings as a percentage of forex reserves,and portfolio diversification needs should drive EM central bank purchases.1.HSBC average gold price forecasts USD/oz _ 2019f _ _ 2020f _ _ 2021f _ _ Long Term _ Old New Old New Old New Old New Gold 1,314 1,362 1,345 1,370 1,350 1,380 1,350 Unchanged Note:Long term=five years.Year-end 2019 and 2020 forecasts are USD1,455/oz and USD1,465/oz,respectively.Source:HSBC 8 July 2019 James Steel Chief Precious Metals Analyst HSBC Securities(USA)I+1 212 525 3117 Gold Outlook Commodities Precious Metals Global Stormy weather drives sunnier outlook Commodities Precious Metals 8 July 2019 2 Executive summary 3 Investment case for gold 6 Investment market trends 13 Trends in demand 17 Trends in supply 24 Disclosure appendix 30 Disclaimer 32 Contents 3 Commodities Precious Metals 8 July 2019 Executive summary Gold is benefiting from anticipated Fed rate cuts,economic risks,and high negative-yielding debt;the main upside obstacle is a firm USD Mine supply is limited but scrap is rising;central bank offtake strong;builds in ETF and Comex longs leave markets open to profit taking We see gold upside and raise our 2019/20 forecasts to USD1,362/oz and USD1,370/oz,respectively;EM likely to set a ceiling on prices Investment demand key to prices The flows are going back to gold Gold prices have moved substantially higher so far this year after a generally uninspiring performance in 2018.After rallying to USD1,365/oz in April 2018,gold prices slumped to USD1,160/oz in August last year,closing out the year at USD1,284/oz.Golds poor performance in 2018 was a little surprising as it occurred against a backdrop of many ostensibly bullish developments.These included mounting global trade frictions,frequent bouts of investor risk aversion,elevated geopolitical risks,and stock market and currency dislocation.These events generated“safe-haven”flows that tended to go to US assets,support the USD,and weigh on gold.A perceived tightening by the Fed through to December,was also gold negative.In other words,the dominance of the USD undermined gold.The situation has since turned around notably and gold has swung back into favor by investors.Gold appears to be a focus of“safe-haven”demand.Elevated trade and geopolitical risks,many of which appear to have risen this year,have funneled fund flows into gold.There is historical evidence to show that should trade flows contract,gold prices tend to rally,albeit with a lag.While periodically these risks have eased,as with an announcement of resumption of US-Sino trade talks or fresh diplomatic efforts on the Korean continent,a certain level of risk remains intact,to the benefit of gold.Trade risks appear to be playing a role in a slowing global economy,which along with persistently low inflation has led to a shift in Fed policy towards easing.Record demand for low-risk government debt has forced yields in many OECD nations,including Germany and Japan,into negative territory.Negative bond yields remove the opportunity costs of owning gold and are a sign of economic uncertainty,which also supports bullion.Gold has also managed to rise in the face of equity strength.This implies that investors remain uncertain and still lean towards bullion.These factors are gold bullish and look likely to remain so,on balance,this year.But we expect golds gains will be held in check by a firm USD(as is forecast by the HSBC FX research team)and emerging market consumer resistance to high prices.Investor demand strong After increasing a modest 2.2moz or nearly 69t in 2018,Exchange Traded Funds(ETFs)holdings are up more sharply so far this year.At the start of the year,gold ETFs held 71.1moz.This level has climbed to 74.22moz as of writing,the equivalent of 97t.This includes a significant one-day increase in ETF offtake in the wake of the June FOMC meeting.We believe the shift in Fed policy,and still elevated risks and uncertainty will support ETF demand this year and next,but at a more moderate pace.We see investors accumulating 120t into ETFs this year and 100t in 2020.Gold prices fell in 2018 as“safe-haven”flows went primarily into US assets Gold is now benefitting from“safe-haven”flows Comex longs and ETF holdings have risen this year Commodities Precious Metals 8 July 2019 4 We illustrate changes in ETF holdings since 2007 in Chart 2.Net long positions on the Comex essentially collapsed in 2H18,with the market going net short in mid-October for the first time since 2001.Since then the market has staged a notable turnaround.Net long positions have rebuilt and,although subject to some liquidation in April,jumped more recently to as high as 26moz net longs.Although we look for builds to continue this year,the jump in gross long positions of nearly 36moz and low gross short positions of under 10moz leaves the market open to profit taking,in our view.Firm USD presents headwinds,Fed policy supportive It is hard to exaggerate the influence of the USD on gold.The two have a natural inverse relationship.HSBC FX strategists forecast a stronger USD against most currencies for the rest of 2019,with EUR-USD expected to end the year at 1.10 and then steady into 2020.USD strength is the main threat for gold,in our view,and is likely to present headwinds to rallies and may be an obstacle to further gold gains.Easier Fed policies in light of the June FOMC meeting is supportive of gold,however,as is the high levels of negative yielding government debt worldwide.Even so,with expectations of Fed cuts this year so high,we wonder if much of this is already baked into the gold price.Physical buyers to the rescue We remain positive on gold prices for the rest of 2019 and 2020,but expect underlying physical markets to determine the extent of any rally.Physical gold demand appears to be moderately positive.After bottoming out at 4,199t in 2017,demand increased by a healthy 5%clip to 4,399t in 2018.The most recent quarterly data show a slight easing in overall gold demand,according to the World Gold Councils Gold Demand Trends compiled by Metals Focus.The report shows Q1 2019 demand dipping 2%yoy to 1,304t,but up 6%from 1,226t the previous quarter.This includes a 1%yoy gain for jewelry demand at 530t.We look for the pace of jewelry offtake to quicken to a more substantial 100t in 2019 and to 90t in 2020,based in part on higher income and spending patterns from India,China,and the US.Higher prices could restrain this element of demand.Coin and bar demand has been mixed.Q1 2019 coin and bar demand eased 1%to 258t yoy compared to 248t,and was down more than 9t compared to the previous quarter,according to the WGC.A breakdown between coins and bars shows 2018 bar demand almost unchanged while coin demand jumped.We look for the better demand in this category for the rest of 2019 and in 2020.We forecast demand will break back above 1,100t for the first time since 2013.We anticipate an increase of 54t to 1,150t in 2019 followed by an additional rise of 75t to 1,225t in 2020.We note a reluctance on the part of key consumer EM nations to accumulate gold,especially for jewelry on price moves to or above USD1,500/oz and we believe this will help restrain rallies to those levels.We also note some reluctance by consumers to accumulate gold surfacing on the move above USD1,400/oz.Jewelry buying is the single-biggest demand source of gold and is the cornerstone of the gold market.2.Gold and exchange-traded funds Source:Bloomberg,HSBC A firm USD represents a significant potential headwind to higher gold -200 400 600 800 1,000 1,200 1,400 1,600 1,800 2,000-10 20 30 40 50 60 70 80 90Dec-07Jun-08Dec-08Jun-09Dec-09Jun-10Dec-10Jun-11Dec-11Jun-12Dec-12Jun-13Dec-13Jun-14Dec-14Jun-15Dec-15Jun-16Dec-16Jun-17Dec-17Jun-18Dec-18Jun-19MozGold in ETFs(LHS)Gold price USD/oz(RHS)5 Commodities Precious Metals 8 July 2019 Central bank gold demand jumped sharply in 2018 rising to 657t,a 75%increase from 2017.The bulk of central bank purchases in 2018 were initiated by just a few nations:Russia,Turkey,and Kazakhstan.That said,a total of 24 central banks bought gold in 2018,some of them for the first time in decades.Demand remains strong and is up 215t so far this year.The return of China after a long absence is an important development.While demand may moderate from these levels we expect geopolitical and currency risks to encourage ongoing official sector offtake this year and next.EM central banks generally hold low gold reserves as a percentage of forex holdings and may seek to increase holdings.We believe the impact on prices of central bank demand has been underestimated(see Trends in demand section on page 17).Supply is up Mining is the single-biggest supply source for gold.2018 saw global production at a record high,but the trajectory of increases in the past few years has slowed.We believe that output is plateauing,and net gains will broadly cease after 2021 and output will edge gradually lower as the next decade unfolds.We base this on fewer new projects moving through the production pipeline.Output may fall more markedly long term as reduced capital expenditures,notably E&P spending,and a lack of new large discoveries,are set to inhibit output.Recent increases in exploration budgets may not be sufficient or timely enough to prevent this.Short of an even more robust rise in prices than already seen this year,the downward trajectory for mine output looks likely.There is a potentially vast pool of gold scrap,the mobilization of which is boosting supply.Recycling rates are price sensitive and we believe prices above USD1,400/oz are stimulating greater supply.This may be an important supply addition this year and next.We see only modest scope for hedging in 2019-20.On balance,we believe that this cocktail of factors is raising supply and will help meet higher demand.Limited mine output will not lead to a shortage of gold due to the presence of large above-ground stocks,but it may lend psychological support to the market.See table 3 for our latest estimates for supply and demand forecasts for 2019-20.We raise our average price forecasts for 2019,2020,and 2021 to USD1,362/oz,USD1,370/oz,and USD1,380/oz from USD1,314/oz,USD1,345/oz and USD1,350/oz,respectively,and leave our long-term forecast unchanged at USD1,350/oz.We look for a wide trading range of USD1,320/oz-USD1,505/oz for the remainder of 2019.Central bank gold demand should remain firm in 2019 We think that gold mine supply will increase only modestly this year and next 3.Gold:Supply/demand balance actuals and forecasts(tonnes)2013 2014 2015 2016 2017 2018 2019f 2020f Supply Mine production 3,110 3,203 3,289 3,397 3,442 3,503 3,538 3,593 Official sector net sales -624-584-577-390-377-657-580-575 Old gold scrap 1,248 1,188 1,121 1,281 1,156 1,168 1,250 1,230 Producer hedging -28 105 13 33-24-12 50 50 Total supply 3,706 3,912 3,846 4,321 4,197 4,002 4,258 4,298 Demand Jewelry 2,726 2,532 2,458 2,101 2,237 2,242 2,342 2,432 Electronics 279 277 262 256 266 268 256 264 Dentistry 23 20 19 18 17 15 15 15 Other industrial uses 54 51 51 50 51 51 51 52 Other fabrication 356 348 332 324 334 335 321 330 Total fabrications 3,082 2,880 2,790 2,425 2,571 2,577 2,663 2,762 Bar hoarding 1,358 780 790 797 782 782 799 855 Official coins 270 205 224 207 188 241 274 290 Medals 101 80 76 68 75 73 77 80 Exchange-traded funds -906-172-122 575 206 69 120 100 Total investment demand 823 893 968 1,647 1,251 1,165 1,270 1,325 Total demand 3,905 3,773 3,758 4,072 3,822 3,742 3,933 4,087 Balance=net investment -199 139 88 249 375 260 325 211 Gold price(average,USD/oz)1,411 1,266 1,160 1,251 1,257 1,274 1,362 1,370 Source:Metals Focus,World Gold Council,GFMS HSBC Commodities Precious Metals 8 July 2019 6 Investment case for gold Gold is benefitting from a shift in Fed policy;negative yields globally and increasing private debt levels are also price supportive Gold is buoyed by trade and geopolitical risks;prices are up despite equity gains,but further stock market rallies may weigh on bullion A strong USD is likely to present the most powerful headwinds to rallies;an ongoing flat yield curve might aid gold Gold shines A strong USD remains golds principal headwind In our previous Gold Outlook,Back in its element(10 January 2019),we presented a generally positive ou