gold getting touched up $348 nc, page-15

re: gold touched $341o/night This came out about 1 hr ago, i found it interesting - have a gander.

TORONTO, Jan 16 (Reuters) - The gold price is expected to
average $330 an ounce in the first half of 2003 but a lengthy
war in Iraq could easily drive the market over $370, Gold
Fields Mineral Services said in a gold survey update on
Thursday.
But the London-based commodity research and consulting
company warned that if the Iraqi crisis fizzles out and
investors bail out of the safe-haven metal, gold could go back
down to below $310 an ounce.
Philip Klapwijk, managing director of Gold Fields Mineral
Services (GFMS), told a conference in Toronto that renewed
investor interest and sustained hedging cuts in 2002 were the
main reasons behind gold's rise last year to more than $300 an
ounce and it's expected increase in early 2003.
He said investor interest more than doubled last year,
motivated by political uncertainties mainly around Iraq, and
economic developments such as falling stock markets, corporate
fraud, lower interest rates and a weaker U.S. dollar.
"Our current estimates show investment as having more than
doubled, but we are being cautious here -- it's possible that
the actual figure would have been much larger still," Klapwijk
said in a prepared statement.
The survey expects gold producers to keep cutting their
hedge books this year on optimism about the gold price and
pressure from shareholders.
The scale of hedge cuts is expected to fall further in the
first half of 2003 but still reach a significant 135 tonnes. In
all of 2002 global hedge books contracted by 352 tonnes, GFMS
said.
"De-hedging could prove important this year for price
support if investors prove as fickle as some fear and
fabrication remains poor," Klapwijk said.
Hedging occurs when producers sell their as yet unmined
gold in forward markets at fixed prices to protect their
income.
Over the past year big producers have slowly transformed
themselves into net buyers of gold by removing supply from the
market and securing physical supply by buying back their hedged
positions.
GFMS said total fabrication fell by more than 10 percent in
2002, mainly because gold rise led to a fall in jewelry manufacturing in price sensitive markets such as the Middle
East and India.
India, the world's largest gold consumer, is expected to
lead a partial recovery of 4 percent in global fabrication in
the first half of 2003, Klapwijk said, but added: "If we don't
see prices easing back to more like $330 and instead they hold
at over $350, we could easily see first half fabrication
slumping to below last year's low levels."
GFMS said gold supply would have less of an impact on the
gold price this year after a fall in mine production of nearly
2 percent year-on-year to 2,543 tonnes in 2002, the first fall
in output since 1995.
Lower grades at the world's largest gold mines, at Grasberg
in Indonesia and at the Nevada operations in the United States,
contributed to the near 60 tonne drop in 2020 production.
Output in the first half of 2003 is expected to rise by 3
percent year-on-year in early 2003, but full year volumes are
expected to be flat, GFMS said.
"We'll probably have to wait until at least 2004 before
falls in mine supply get more interesting," said Klapwijk.
Official sector sales were also broadly flat last year but
GFMS pointed out that sales in 2003, outside of Europe, could
pick up in response to recent price gains.