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

To: lorne who wrote (23376)	11/24/1998 6:16:00 PM
From: lorne	Read Replies (1) \| Respond to of 116791

Professionals seen continuing to use gold as hedge 08:09 a.m. Nov 24, 1998 Eastern LONDON, Nov 24 (Reuters) - The outlook for gold next year is relatively good with bullion expected to continue acting as a risk hedge in the professional markets, stockbrokers T Hoare & Co said in a report. T Hoare & Co metals analyst Rhona O'Connell said she expected the gold price to average around $325.00 a troy ounce in 1999 compared to the average price this year of $295.00. O'Connell forecast gold to reach $340/oz in 2000. ''While a 10 percent increase in 1999 may look daunting, historically there is absolutely no reason why it should not develop. Over the 1980s and 1990s the average difference in average prices has been 9.4 percent,'' O'Connell said. Dollar prices of gold are expected to improve over the next 12 months but O'Connell said this would not occur in a consistent and sustained way. ''However, the changing fundamental forces and the alteration of professional attitudes towards the metal bode well for a series of staged increases interspersed with periods of consolidation.'' She said the tone in the gold market is changing. ''It is attracting professional activity when strains show in the financial sector, Central Bank lending is being marginally reduced, there is less scope or need for hedging of future output as exploration has been savagely cut back and physical demand is stabilizing,'' O'Connell added. The report said for the past three years it had been profitable to maintain a short position in gold but this no longer held sway. ''It may well be that the time is fast approaching when it will be profitable to be long -- and the interest in the gold equities is already telling us as much.'' The report said physical demand was expected to drop overall by around 17 percent or 700 tonnes in 1998 as a result of Asia's financial turmoil. ''There is little sign yet of Asian buyers coming back into the market. Come they will, but it will take time, plus stabilization of currencies and the return of some confidence before sustained buying is seen again,'' the report said. Turning to platinum, O'Connell said she expected a $400.00/oz average price in 1999 and $440.00/oz in 2000. ''The market is expanding both in terms of supply and demand and although the demand side is not expected to grow by much next year, it is working from a higher base than supply,'' the report said. She said the platinum market remained out of balance in the long term and heavily sold short while it continued to react to any news out of Russia. ''Russia will have to continue selling from inventory to maintain a balance next year and in 2000, and the market generally does not believe this to be possible,'' O'Connell said. ((Marius Bosch, London newsroom +44 171 542 8065, fax +44 171 542 8077. london.commodities.desk+reuters.com))