HSBC raised its 2008 price forecast for gold to $915 an ounce from $850 on the back of a weakening dollar, more U.S. rate cuts, inflationary pressures as well as safe-haven demand. “The U.S. dollar remains an important determinant of gold prices, but inflation concerns and a resumption in Fed rate cuts may offset the bearish effect of recent USD strength,” James Steel, metals analyst at HSBC Securities in New York, wrote in a research note. Steel also raised his gold forecast to $850 from $725 for 2009, and to $725 from $650 for 2010. Gold’s inflation hedge role increased as oil turns sharply higher to just under $133 a barrel, near its record-high $135.09 a barrel set on Thursday. If the bullish crude market continues to stay firm, the gold market should follow suit. Gold should be supported in the near term as the likelihood of massive profit-taking in crude oil was slim.
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