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Gold to outperform silver, platinum and palladium

Precious metals * The gold price will average US$336 an ounce this year, a gain of more than 8 percent from last year, according to expectations of 18 analysts. * Silver will rise almost 7 percent to US$4.92 an ounce. * Platinum should add almost 6 percent to US$571 an ounce. * Palladium will sink 23 percent to US$260 an ounce, the survey found.

Gold prices will outperform those of other precious metals such as silver and platinum as political tensions, a weakening dollar and concerns of stagnant economic growth spur demand, analysts said.

The gold price will average US$336 an ounce this year, a gain of more than 8 percent from last year, according to the average expectations of 18 analysts contacted by Bloomberg. Silver will rise almost 7 percent to US$4.92 an ounce, while platinum should add almost 6 percent to US$571 an ounce. Palladium will sink 23 percent to US$260 an ounce, the survey found.

Gold last year had its biggest gain since 1979 as investors sought a haven from declining stock markets, a weakening dollar, terrorism and the threat of a war against Iraq. Fifteen out of 18 respondents in the survey predicted an increase in gold prices, while only one expected a decline.

"The factors that drew gold higher in 2002 shall continue to prevail in 2003," said Frederic Panizzutti, a director at Geneva-based GoldAvenue, a trading and marketing service. "There is a threat of further terrorism and the risk for a military intervention in Iraq combined with volatile stock and currency markets."

Platinum will continue to benefit, after a 26 percent gain last year, from growth in demand that is outpacing supplies from mines, the analysts said. Demand was expected to rise 2.9 percent last year to 6.37 million ounces, almost half a million ounces more than mine production, according to Johnson Matthey Plc, the world's biggest precious-metals marketer.

Platinum, mined mostly in South Africa and Russia, is used in jewelry and by carmakers to make exhaust systems.

"The inability for new mine supply to meet this growing demand will produce several years of deficit," said Ingrid Sternby, an analyst at Barclays Capital in London. "We expect strong end-use demand from key sectors to keep prices firm."

Rival metal palladium is also used by carmakers in auto catalysts. They cut their purchases last year, leading to a drop in demand that meant consumption last year was probably its lowest since 1994, according to Johnson Matthey. The metal last year lost 46 percent of its value, prompting Russia, the biggest producer in 2001, to embargo sales to the open market.

Palladium is also used by dentists and by manufacturers of electronics, chemicals and jewelry.

"It is difficult to make a bullish case for palladium," said Ross Norman, a director at TheBullionDesk.com, a research company. "Car stocks are high, car sales are forecast to decline, the shift to platinum is gathering momentum and electronics demand looks terminal."

Silver is likely to be buoyed by the gains in gold, analysts said. A mean price of US$4.91 this year would be its highest yearly average since 2000, when it averaged US$4.96 an ounce.
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