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Morgan Stanley puts 2008 gold forecast at $800/oz
Fri 12 Oct 2007, 11:14 GMT

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LONDON (Reuters) - Investment bank Morgan Stanley said on Friday it was introducing its 2008 gold price forecast at $800 per ounce and expected the metal to benefit from strong global growth and spreading inflation problems.

It said growth in demand, particularly from an expanding middle class in the developing world, would continue to be the main driver of gold prices in the long run. "However, inflation and dollar concerns have temporarily surged to centre stage," the bank added.

It said global growth was able to progress as it had "de-coupled", or detached, from the United States, which is braced for further fallout from the crisis in credit markets caused by problems in the U.S. high risk mortgage sector.

The dollar has fallen to successive record lows versus the euro -- making gold cheaper for non-U.S. investors -- as investors fretted over the impact of the credit crisis and the prospect of a series of U.S. interest rate cuts.

The Federal Reserve cut borrowing costs 50 basis points to 4.75 percent in September.

Morgan Stanley said it was leaving its previous forecast for 2007 gold prices intact at $680 per ounce, but the silver price was lowered to $13.30/oz from $13.80/oz. It put the 2008 forecast at $15.00/oz. "Silver prices have been weighed down by economic uncertainty...specifically, silver's exposure to industrial demand has made prices vulnerable to general economic growth concerns stemming largely from fears concerning a U.S. growth slowdown," the bank said.