TORONTO (Reuters) - The gold price should rise 11 percent by the end of 2004 because of a new pact restricting sales of the precious metal, a weak U.S. dollar and stable mine output, one of the gold industry's most respected forecasters said on Monday.
Independent analyst, Martin Murenbeeld, told delegates at the annual convention of the Prospectors & Developers Association of Canada that the price of gold could close out 2004 at $445 an ounce before advancing another 3.4 percent to average $460 an ounce in 2005.
He said the renewal on Monday of the so-called Washington Agreement, a pact among 15 European central banks to sell their gold reserves in an orderly manner so as not to disrupt the bullion market, will help maximize the price for official gold sales and remove uncertainty from the market.
The group of central banks, which includes the European Central Bank as well as the German, French and Swiss central banks, pledged to limit their combined gold sales to 500 tonnes a year for five years.
The total was broadly in line with expectations and slightly higher than the combined 400 tonnes a year of the previous agreement, which is due to expire in September.
Bullion prices were little moved by news of the renewal, fixing at $399.85 an ounce in London afternoon trade, because the announcement had been expected soon.
The weakened U.S. dollar, which has prompted a flight to hard assets and made dollar-denominated gold more attractive to buy in other currencies, should also send the price of gold closer to his forecast, Murenbeeld said.
The Victoria, British Columbia-based analyst, whose clients include many of the world's biggest gold producers, said he is not concerned that a surge of new bullion supply would hit the market over the next few years.
"This is not the stuff that gets gold down from $400 to $250, and it sure isn't the stuff to get gold up from $250 to $400," Murenbeeld said.
(Additional reporting by Nicole Mordant)
($1=$1.32 Canadian)
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