[miningmx.com ] — PRECIOUS metal price expectations are more bullish than ever, with the average gold price forecast of 29 contributors up $117 to $652 from the previous year, according to a London Bullion Market Association (LBMA) compilation of a record number of forecasts.

The forecasts for gold, silver, platinum and palladium prices in 2007 varied widely, more widely than the previous year.

Last year was a year when 25 gold price forecasters came in well below the $603 average in 2006. A prediction of $618 by The BullionDesk’s Ross Norman was the sole forecast above the year’s average price, making him the winner.

Silver’s $11.59 average was not expected by any of the 22 forecasters and nobody estimated the price any higher than that.

Nineteen forecasters had more accuracy with the 2006 average palladium price of $320, with a tight cluster of estimates around the staid price. Platinum’s performance, however, left it well above most of the 20 forecasts at an average $1,142.55.

Forecasters this year have raised their sights considerably, and the average gold forecast by 29 contributors is now $117 higher than that of a year ago. The average silver forecast of 25 people is some $4 higher and platinum $187 more than before. Palladium’s average is up $63.

GOLD

Norman estimated the average gold price in 2007 to be $716, ranging between $580 and $850, a record high.

Sentiment towards gold would be supported by institutional investors taking up exchange-traded funds and bullion-linked indices across the globe, he said.

A weaker US dollar, flat mine output, a strong oil price, inflation and geopolitical tensions would all support the gold price, he added.

However, Adam Graf from Federated Global Investment Management Corp. in New York was this year’s most bullish gold forecaster, putting the average at $755, with an average of $620 to $785.

“A weakening US dollar, continued fund flows and lower net central bank selling should drive pricing higher in 2007; while global liquidity levels should transition from a supportive to neutral influence,” Graf said.

“Currency, liquidity and fund flows continue to be the dominant controls on gold price (not supply-demand),” he said.

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Stephen Briggs at Societe Generale in London proved to be the most bearish, forecasting the gold price at $580, ranging between $500 and $675. He was bullish across all the precious metals.

The bearishness stemmed from a house view that the US dollar bear market would end in 2007 and the bull market in commodities had turned into a bubble that was busy deflating, Briggs said. The bearish approach to the dollar had been the most important factor driving gold higher last year, he added.

SILVER

Graf won the 2006 silver price forecast, with his $10.50 prediction. This year, he expects silver to average $15.50, with a range of $12.70 to $18.30, making him the most bullish.

A higher gold price, increased use of silver and speculative investment would support the price and add to volatility, he said.

“However, increased supply from new primary and by-product mine production should be a tempering fundamental influence,” he said. “These offsetting factors should cause silver to largely trade sideways in 2007.”

Briggs expects silver to average $9.75, ranging from $8 to $13.75. Unless ETF demand continued to mop up physical silver as it did in the first year of existence in 2006, silver would under perform gold this year, he said.

Mine output should be higher this year, while jewellery demand has been hit hard by high silver prices, he said.

PLATINUM

Last year’s platinum forecast was won by Glyn Stevens from INTL Commodities in London, with his estimate of $1,125. He’s this year’s most bullish platinum forecaster.

Stevens estimates platinum to average $1,375 in a range of $1,050 and $1,600 because of stricter emissions legislation and growing numbers of diesel vehicles. Investor interest will also limit downside risk, he said.

“Declining jewellery demand and increasing South African production may subdue the bulls, but good electronics, glass and chemical sector offtake will take up some of the slack,” he said.

Briggs, the most bearish again with a prediction of an average $1,000 and range of $900 to $1,200, said platinum had the most favourable fundamentals of the four metals and demand would pick up on any price weakness.

Frederic Panizzutti from MKS Finance in Geneva won the palladium forecast with his estimate of $321. He expects palladium to trade in a narrow band this year of $300 to $400 and average $330.

Palladium could move higher on the back of speculative interest because of upward moves in the other precious metals.

“While we believe a rally is likely, we do not believe that the $400 psychological target is sustainable or justified in the context of sufficient physical metal availability and stable demand,” he said, adding any upside move would be short-lived.

PALLADIUM

This year’s most bullish palladium forecast came from Glyn Stevens, who saw it averaging $475 in a range of $280 to $680.

It was difficult to make a fundamental case for an increased palladium price, but it is highly likely that speculators could pile into the metal, which is very cheap compared to its sister metal platinum, he said.

“The current low level of investor interest in palladium can only exacerbate the situation as participants scramble to re-establish long positions,” he said.

Briggs forecasts palladium will average $255 and trade between $200 and $375 because there will be more than adequate supplies of the metal.

“If the major precious metals do weaken on the back of waning speculative interest, the palladium price could eventually drift down towards $200,” he said.