CORRECTED - Gold, PGMs seen higher in 2000, silver down
In LONDON story headlined ``Gold, PGMs seen higher in 2000, silver down'' please read in the
first paragraph...``Gold should average $288.08 a troy ounce this year, some 3.4 percent higher
than last year...'' instead of ...``Gold should average $288.72 a troy ounce this year, nearly four
percent higher than last year''... (correcting 2000 average price forecast)
biz.yahoo.com
This reflects a correction to the Commonwealth Bank of Australia entry for average 2000 in the
table to $291 from $305.
A corrected story follows.
By Sara Marani
LONDON, July 11 (Reuters) - Gold should average $288.08 a troy ounce this year, some 3.4 percent (corrected) higher than last year with
the bullion market likely to focus on rationalisation of the industry, according to a Reuters poll.
The poll of 22 analysts also found that gold was expected to average $303.02 next year, nearly nine percent up on 1999's average, as
central bank sales, which weighed on prices in 1999, were expected to take a back seat this year.
Platinum and palladium were also expected to average higher, with platinum seen up 36.18 percent in 2000 at $512.69 an ounce and
palladium seen 67.16 percent higher at $597.72.
But silver's weaker performance so far this year was seen continuing, with the average price seen down 3.68 percent from 1999 at $5.12
an ounce.
Twenty analysts submitted forecasts for silver, 16 for both platinum and palladium.
GOLD SEEN MOVING HIGHER
Analysts said current positive sentiment had been fed by the beginnings of rationalisation of the industry's supply side.
``We expect gold prices to track higher over the coming months as the rationalisation of the industry continues,'' said HSBC analyst
Alan Williamson.
Last month a pact between North America's Newmont Mining Corp. (NYSE:NEM - news) and Battle Mountain Gold (NYSE:BMG -
news) was swiftly followed by a merger bringing together Canada's Franco-Nevada Corp. (Toronto:FN.TO - news) and South Africa's
Gold Fields Ltd .
Just a fortnight ago, another deal involved Barrick Gold (Toronto:ABX.TO - news) buying Pangea Goldfields Inc. (Toronto:PGD.TO -
news).
Also supporting a price move higher, gold's fundamentals ``continue to suggest that it has bottomed but the high price elasticity of
demand -- and, to some degree, supply -- suggest that fundamental gains should be steady,'' according to Rhona O'Connell, analyst at
Canaccord Capital Corp. in London.
Most analysts agreed that fundamentally the gold market outlook was balanced, with insufficient demand at higher price levels to
justify a sustained bull run.
``The likelihood of a return of the panic selling we witnessed in 1999 has also diminished,'' said Kamal Naqvi, analyst at Macquarie
Equities. ``We expect the dominant trading range to be between $250 to $300 an ounce and within this we favour a likely narrow trading
range of $270 to $290.''
WEAK DOLLAR WOULD HELP GOLD
Another hope for gold would be a weaker U.S. dollar, a scenario several of the analysts predicted.
``We expect the U.S. dollar to weaken against all major currencies, making gold less expensive in terms of currency conversion,'' said
Frederic Panizzutti, vice-president of strategy and research at MKS Finance in Geneva.
``Any sharp decline in the dollar would result in a wide process of portfolio reallocation. Gold would be a perfect diversification asset
against European and Asian currencies as it generates U.S. dollars.''
Last year's Washington Accord set limits on the gold sales of 15 central banks, capping combined sales at 400 tonnes per year over five
years so as not to destabilise the market.
While fears of sales ahead of this agreement had pressured prices, the accord itself alleviated concerns and the market was expected to
be unaffected by actual sales this year.
While only one of the average forecasts for 2000 topped $300, by 2001 average price estimates ranged from $270 to $350.
PLATINUM, PALLADIUM SUPPLY DEFICIT
The key features for platinum and palladium were seen as continued physical tightness and further supply deficits.
``Supply is likely to be constrained by capacity limitations short term in South Africa while producers rush to build new mines. It's a
safe bet to say that Russia will remain the dominant feature,'' said thebulliondesk.com analyst Ross Norman.
Erratic supplies from Russia have led to sharp price spikes, and last week metals giant Norilsk Nickel ordered export agent
Almazjuvelirexport (Almaz) to resume supply contracts with Japanese customers. Traders expected exports to resume around
September.
``The PGMs have strong fundamentals but consumer inventory building and the hiatus in Russian supplies...are expected to come back
and bite both of them as the situation reverts to more rational conditions,'' said Canaccord's O'Connell.
With supply deficits expected to stay in place for platinum, demand was seen robust with U.S. carmakers confirming a switch towards
platinum in autocatalysts -- and further out towards fuel cells.
For palladium, after four years of uncertain supply and volatile prices, demand side interest was seen declining.
``With the Russians carefully adjusting supply to maintain prices around current levels the effect of industrials leaving the sector may
not be immediately apparent,'' said Norman.
``However, with South African PGM production rising in pursuit of platinum, they will be liberating increased volumes of palladium for
which there may be fewer willing takers.''
SILVER SEEN RANGE-BOUND
Less activity was expected in the silver market for the rest of this year and 2001, probably resulting in price equilibrium interspersed with
sporadic burst of activity.
The price was seen staying close to $5.00, where it has been hovering for several months.
``We believe that silver prices are likely to be largely range-bound in 2000 and 2001, taking price direction from gold and, increasingly,
from the industrial metals,'' said Naqvi. |
