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To: ms.smartest.person who wrote (1533)	10/6/2006 2:52:15 PM
From: ms.smartest.person	Read Replies (1) \| Respond to of 3198

GFMS sees gold above $600 by year-end Thu Oct 5, 2006 7:21 AM ET By Lewa Pardomuan SINGAPORE (Reuters) - Gold is likely to rebound and trade above $600 by the end of the year on expectations of U.S. interest rates cuts and festive demand in major consumers, a senior industry official said Thursday. Philip Klapwijk, executive chairman of precious metals consultancy GFMS Ltd., said gold would eventually hit $700 next year. This would help lift prices of other precious metals, such as platinum, palladium and silver, which have also suffered from a sell-off recently. Spot gold <XAU=> was quoted around $563 an ounce. It hit a two-week high of around $606 last week, and has since struggled to hold above $600. "I think by December we will certainly be over the $600 level again, given the political issues that are, perhaps to some extent, being ignored at the moment," said Klapwijk, referring to tensions over Tehran's nuclear ambitions. "By December is by no means impossible that we start to see U.S. interest rates being cut. This is going to remove a significant prop for the U.S. dollar," Klapwijk told Reuters on the sidelines of an industry gathering. The U.S. dollar has remained firm in recent weeks even as an array of soft economic data has stoked expectations the Federal Reserve's next move would be to cut rates next year, after keeping them steady for the past few months at 5.25 percent. Gold, used in jewelry and investment, has lost more than 20 percent since hitting a 26-year high of $730 in May, when investors diversified into precious metals. Klapwijk said gold would find support around $540 an ounce and purchases from jewelry makers in main consuming nations, including India, ahead of religious festivals would help gold trade above $600. The festival season in India begins in August and peaks in November during Diwali, the Hindu festival of lights. India is the world's largest bullion consumer. "We think that within the next six months, there's a reasonable chance that gold will be over $700 again," said Klapwijk. "If we see gold prices move above $700 in 2007, maybe toward the end of 2007...I'll find it hard to believe that platinum will not also be making some pretty big moves at that time. I think platinum will also rise in sympathy," he said. Platinum <XPT=>, used in jewelry and auto catalyst, spiked to an all time high of $1,336 an ounce in mid-May, but have now retreated to around $1,072. "I would expect an increase in the gold price would be positive for platinum, to a lesser extent for palladium prices and also to silver prices," said Klapwijk, without elaborating. GMFS has said platinum demand for jewelry making is expected to fall by nine percent to 1.7 million ounces this year as high prices discourage buyers and prompt some consumers to shift to less costlier palladium jewelry. Platinum jewelry demand in China has been falling because of high prices and falling profit margins for fabricators and retailers. China accounts for nearly half of world's platinum demand. © Reuters 2006. All rights reserved. today.reuters.com