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Gold/Mining/Energy : Gold Price Monitor -- Ignore unavailable to you. Want to Upgrade?

To: Alex who wrote (2994)	11/9/1997 4:38:00 PM
From: Bucky Katt	Read Replies (1) \| Respond to of 116825

Alex, did you ever get a copy of the Jim Dines book?

To: Alex who wrote (2994)	11/9/1997 5:01:00 PM
From: Donald McRobb	Respond to of 116825

JOHANNESBURG, Nov 6 (Reuters) - The gold price is seen averaging $300 to $325 an ounce next year with an outside chance of making it to an average $350, a poll of eight London and Johannesburg analysts showed on Thursday. They blamed continued central bank sales, increased producer hedging and declining physical demand for 1998's expected weak levels. UBS Johannesburg-based gold analyst Leon Esterhuizen painted a gloomy fundamental picture and forecast a bearish $300 an ounce for next year -- sharply lower than the average 1997 spot price to date of $334 an ounce. ''We think it's probably going to start the year on the $310 to $320 level and then maybe end up closer to the $280 level. It's not a good fundamental picture,'' he told Reuters. ''You saw what happened earlier when the Swiss said they're going to sell. Even on the fundamental markets, things are starting to pull back now. The East has simply stopped buying. ''Apart from that every time you see a bit of a spurt in the gold price the producers are just going to hedge the hell out of this thing,'' Esterhuizen said. The gold price sank to a new 12-year low of $308.75 an ounce on October 24 when Switzerland announced that a government-appointed advisory panel had recommended it sell 1,400 tonnes of gold reserves. Bullion's last 12-year low of $313.60 an ounce was on July 7 when Australia said it had sold 167 tonnes of gold reserves. The metal was last trading in London at $312.30/2.80 an ounce. Analysts said the shadow of central bank gold sales would continue to spook the market in 1998, adding to the myriad of reasons why the bullion price should go down and not up. ''Unfortunately, while there are still these threats from huge sales in the wings it's almost impossible to expect the gold price in dollar terms to rise. Not when we've got central banks wanting the Euro market economic unit coming on line, their central banks getting on line, the Swiss wanting to sell,'' said Dave Giese at Merrill Lynch in Johannesburg. ''There are more reasons why the gold price won't go up than there are to promote a better gold price in dollar terms.'' But Doug Upton, head of commodity research at stockbroker HSBC James Capel in London, forecast gold averaging $350 per ounce next year and said that the market impact of central bank sales would be limited if they kept a low profile. ''A lot of the price fall was because of short selling ahead of the central banks. But the shorts may be getting tired of it as they have seen no appreciation on their short positions and the risk-reward ratio is deteriorating,'' Upton said. ''The central banks provide the dominant issue. Once they have settled that question, all that's needed is for people (shorts) to get bored and go away,'' he said. Another cap on the average gold price next year was that producers would jump at every spike upwards to sell gold at spot and forward, pouring more supply onto the market. Peter Richardson, SBC Warburg global head of commodity research in London, said that the average gold price would have a general trading range of $285 to $320 an ounce with the odd spike up to $340 an ounce, attracting hedgers. ''Every time the gold price rises a lot of producers now come into the market to sell forward,'' Merrill Lynch's Giese said. ''Next year will see probably more supply from central banks and more forward selling from producers,'' said Ted Arnold, first vice president at Merrill Lynch UK. But BOE Natwest analyst Gerard Kemp in Johannesburg forecast an average of $325 an ounce in 1998 and said that producer and central bank selling could actually reduce next year. ''I expect forward selling by producers to reduce and closer to the EMU (Economic Monetary Union) finalisation next year there will be no central bank selling until they've finalised that,'' he told Reuters. Producer selling was expected from South Africa and Australia especially in 1998, Kamal Naqvi, market analyst at Macquaries Global Equities in London said. UBS' Esterhuizen and Richardson said that currencies would play an important role in gold price next year, particularly significant now in the wake of the recent Asian currency crisis which saw world financial markets in turmoil. ''If the currencies in the East depreciate markedly they will all start selling that gold because that's the way they're going to unlock their profits,'' Esterhuizen said. The majority of analysts saw a decline in gold demand in the East, particularly in India and South East Asia in the wake of those countries' currency problems.