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  1. #121
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    Post Asian stock fall, dollar firm on Europe woes

    (Reuters) - Asian stocks fell and the euro remained under pressure on Monday after the resignation of a top German European Central Bank board member cast further doubt on Europe's ability to tackle its worsening sovereign debt crisis.

    Oil prices slipped and the dollar gained broadly as the worries about euro zone's woes combined with fears about flagging world growth to ensure no let up in the gloom that has gripped global markets for much of the past six weeks.

    "People are quite nervous about Greece and other countries in the European area, so that is why investors are escaping to the dollar," said Tetsu Emori, a fund manager at Tokyo-based Astmax Co Ltd. "It's risk aversion."

    Juergen Stark's plan to resign from the ECB's board underscored the internal divisions over its bond-buying program -- one of the central bank's main weapons in fighting the debt crisis by forcing down yields of country's under pressure from the bond markets.

    Japan's Nikkei .N225 fell 2.2 percent, while the MSCI's broadest index of Asia Pacific shares outside Japan fell around 1 percent.

    Data from Lipper showed a brief flirtation with stocks at the end of August has waned, with less than a net $600 million flowing into U.S. equity funds in the ended September 7, compared with a net inflow of $6.3 billion in the previous week.

    MSCI's All-Country World index is now 19 percent below its 2011 high set in May, not far from the 20 percent decline that is the rule-of-thumb definition of a bear market.

    The euro was struggling at around $1.36, after a sharp slide at the end of last week, while the dollar index .DXY, which tracks the greenback against a basket of major currencies, firmed around 0.3 percent.

    U.S. crude slid by 87 cents on Monday to $86.37 a barrel and Brent crude eased as much as 97 cents to $111.80.

    Gold, a traditional safe haven at times of market volatility, was steady around $1,856 an ounce.

  2. #122
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    Post Global stocks hit hard by Greek worries

    (Reuters) - World shares tumbled nearly 2 percent on Monday with European equities at 26-month lows, down more than 20 percent this year, as investors worried Greece would default amid signs of rifts among euro zone policymakers.

    Japan's Nikkei closed at a 2-1/2 year low.

    Yields on long-term core euro zone debt, home to safety plays during times of strife, fell sharply and the euro slumped against the dollar and yen.

    The cost of insuring peripheral euro zone debt against default rose, to record levels for Greece and Portugal.

    Markets were partly reacting to the failure over the weekend of the Group of Seven industrialized nations' finance ministers to come up with more than a stated commitment to help turn the world economy around.

    But they were mainly focused on the euro zone debt crisis.

    "Europe is not just lurching from one crisis to another. It is lurching into a new one before the previous one is solved," said Makoto Noji, senior strategist at SMBC Nikko Securities.

    The pan-European FTSEurofirst was down 2.6 percent.

    German policymaker Juergen Stark's resignation from the European Central Bank's board on Friday underscored internal divisions over its bond-buying program -- one of the bank's main weapons in fighting the debt crisis, by forcing down yields on debt of countries under pressure from the bond markets.

    At the same time, worries bubbled up again over Greece's ability to meet commitments to qualify for more bailout money.

    Fears about a Greek default rose last week after senior politicians in German Chancellor Angela Merkel's center-right coalition started talking openly about it. Greece, meanwhile, confirmed on Monday that the country has cash for only a few more weeks.

    International lenders threatened last week to withhold the sixth bailout payment of about 8 billion euros ($11 billion) because of the country's repeated fiscal slippage.

    The Greek government announced on Sunday a new property tax to make sure it would meet its budget targets and qualify for the tranche.

    "The Greek situation is dominant, chances of some sort of default have increased -- the Germans seem to be hinting at that," one bond trader in Europe said.


    The euro dived to a seven-month low against the U.S. dollar and a 10-year trough versus the yen.

    "The outlook for Greece is almost completely unknown. Support for the country appears to be shaking. The market is starting to think the worst could happen," said Katsunori Kitakura, chief dealer at Chuo Mitsui Trust and Banking.

    "It's as if policymakers are starting to prepare for that," Kitakura said.

    The euro fell as low as $1.34949, its lowest since February.

    On bond markets, Italian and Spanish government bond yields rose, feeling the pressure of upcoming debt supply and the rising concern over Greece.

  3. #123
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    Post Global stocks, euro recover after slide; outlook wary

    (Reuters) - Asian stocks rose and the euro edged off a seven-month low on Tuesday after a report that Italy may get financial support from China sparked a bout of short-covering but did nothing to ease fears that Europe is sliding into another banking crisis.

    Growing expectations of a Greek debt default, sharp drops in European shares -- especially French banks due to their sovereign exposure -- and a surge in Italian bond yields meant sentiment remained fragile and any rally was likely to be short lived.

    "There are still enormous challenges facing the European system at this point and fears around a default in Greece are very high and it's hard to see that changing any time soon," said Greg Gibbs, a strategist at RBS in Sydney.

    The dollar eased broadly, helping lift dollar-denominated commodities such as gold, copper and crude oil.

    Japan's Nikkei share average .N225 rose 1 percent and Australia's benchmark index .AXJO gained 0.9 percent, while MSCI's broadest index of Asia Pacific shares outside Japan .MIAPJ0000PUS edged up 0.2 percent. .T .AX

    The MSCI index is nearly 20 percent below its 2011 high reached in April. A fall of 20 percent or more is the generally accepted definition of a bear market.

    U.S. stocks bounced back late in Monday's session after a report that Italy could get financial support from China tempered investors' worst fears over the euro zone debt crisis. .N

    S&P 500 index futures rose 0.3 percent in Asia on Tuesday.

    Market sell-offs like those of the last six weeks -- driven by the euro zone crisis and fears of renewed recession in the United States -- are often punctuated by "short-covering" rallies, when traders buy to realize profits on bets that an asset would fall in price.


    The Financial Times reported that Italy had asked China to make "significant" purchases of Italian debt. Italy has seen its borrowing costs spike in recent weeks on doubts about the political will in Rome to tackle its swollen debt.

    Greece warned on Monday it would run out of cash next month without the next tranche, around 8 billion euros, of a bailout loan. Euro zone policymakers have threatened to withhold the money as patience with Athens' repeated fiscal slippages wears thin.

    A growing number of policymakers, as well as market economists, are convinced it is only a matter of time before Greece, which keeps falling behind on its fiscal targets after two EU/IMF bailouts, will have to default.

    "The contagion impact of a default will be severe, because next in the firing line will be Italy, Spain and it will take in the whole of the European banking sector too," Suki Mann, a strategist at Societe Generale, wrote in a note.

    In currency markets, the euro climbed to around $1.3685 against the dollar after falling to a seven-month low of $1.3495 in the previous session, though weak demand at an Italian bond auction later in the day may see the single currency fall back again.

    "All eyes are squarely on that seven-month low around $1.35 hit overnight," said Koji Fukaya, director of global foreign exchange research at Credit Suisse Securities in Tokyo.

    "The downtrend in the euro will surely continue, but my sense is that unless the Italian bond auction goes extremely badly, this level may hold today."

    The dollar index .DXY, which tracks the U.S. currency against a basket of major peers, fell 0.7 percent.

    The weaker greenback made dollar-denominated assets cheaper for holders of other currencies.

    Copper rose 1 percent to $8,840 a tonne and oil also gained, with U.S. crude up 0.9 percent at $89 a barrel and Brent crude rising 0.6 percent to $112.90, although traders remained wary.

    "This is a shallow bounce because of Wall Street ending higher, so there is some confidence returning, but I don't think anybody would be putting any big positions given the global situation," said Victor Say, an analyst at Informa Global Markets in Singapore.

    Gold bounced about 1 percent to around $1,831 an ounce, after dropping by more than 2.5 percent in the previous session, also supported by the safe-haven appeal that drove it to a record high of $1,920.30 last week.

    "There is a slow-motion train wreck going on in Europe at the moment, which is going to be relatively supportive of gold," said Nick Trevethan, senior commodities strategist at ANZ.

    "All the factors that have been supporting gold for the past few months are still there. Nothing has changed."

  4. #124
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    Post Gold edges up on euro zone crisis; technicals cap gains

    (Reuters) - Spot gold edged higher on Wednesday, supported by worries about a worsening debt crisis in euro zone, while short-term bearish technicals are likely to cap gains.


    * Spot gold inched up 0.2 percent to $1,837.44 an ounce by 0026 GMT. U.S. gold rose 0.6 percent to $1,841.80.

    * Technical analysis suggested that U.S. gold could move sideways in the next few weeks, while commodities as a whole may correct moderately by the end of the year, said Reuters market analyst Wang Tao.

    * Fears over the euro zone's debt crisis hit new heights on Tuesday, with U.S. President Barack Obama pressing the bloc's big countries to show leadership as talk of a Greek default escalated and markets heaped pressure on Italy.

    * Holdings of the world's largest gold-backed exchange-traded fund, SPDR Gold Trust, edged lower to 1,241.311 tones by September 13 from a 2-1/2-week high of 1,241.917 tones on September 9.

    * Barrick Gold, the world's largest gold producer, plans to invest $550 million in Peru by 2013, the head of Barrick Misquichilca, the company's Peruvian subsidiary, said on Tuesday.


    * U.S. stocks gained on Tuesday as investors bought shares beaten down in recent weeks and bet European leaders would take action soon to ease the Greek debt crisis. .N

    * The euro held onto modest gains against the greenback in Asia on Wednesday, as bears trimmed short positions just in case EU leaders surprised by making progress on Greece in a conference call later in the day.

  5. #125
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    Post Asian stocks, euro edge up on Europe debt hopes

    (Reuters) - Asian stocks bounced on Thursday yet investors remained wary that obstacles which policymakers face in Europe could weigh on the euro and Asian currencies in the medium term.

    The early gains in Asia, tracking the rise in global markets, came one day after the MSCI Asia ex-Japan index .MIAPJ0000PUS hit a 14-month low.

    On Thursday, that index was up 1.2 percent. Japan's Nikkei markets/index?symbol=jp%21n225">.N225 was up 1.7 percent with chipmaker Elpida (6665.T) up 6.1 percent.

    The euro rebounded to $1.3750, easing back from a high above $1.3800 reached after Germany and France voiced their commitment to keeping Greece in the euro zone, giving traders a chance to find better levels to short the common currency.

    Optimism over tentative steps to resolve Europe's debt crisis trumped weaker-than-expected retail sales data in the U.S., helping the S&P 500 finance/markets/index?symbol=us%21spx">.SPX close up over a percent.

    Some traders attributed the gains on Wall Street to short-covering ahead of inflation numbers in the U.S. with Europe still the clear focus.

    European finance ministers have been warned confidentially of the danger of a renewed credit crunch as a "systemic" crisis in euro zone sovereign debt spills over to banks, according to documents obtained by Reuters on Wednesday.

    The gains in Asian stocks put safe-haven bets like U.S. Treasuries and gold on the backfoot.

    Spot gold steadied around the $1,820 an ounce level after having fallen nearly one percent in the previous session. It hit a lifetime high of around $1,920 an ounce last week.

    Yields on ten-year U.S. notes held at 1.99 percent, not far away from its lowest levels in at least 60 years of around 1.91 percent tested last Friday.

    Brent crude for October delivery settled at $112.40 a barrel on Wednesday, gaining 51 cents, snapping four days of losses while U.S. October crude held below the $89 per barrel line.

  6. #126
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    Post Investors peer through the gloom

    (Reuters) - Even after a rare four-day rally in world stocks, investors are unlikely to let their guard down in a week filled with heavy U.S. and euro zone policy risks that could potentially disappoint again and trigger a sell-off.

    There is no doubt gloom is widespread. However, investors are also beginning to realize that betting too strongly on a collapse of financial markets with policymakers poised for action to combat global crisis may be unwise.

    Thursday's coordinated action by five major central banks to add liquidity to a European banking system struggling with its dollar funding needs has lifted world stocks, measured by MSCI .MIWD00000PUS, from a one-year low.

    Focus in the coming week will be on a policy meeting of the U.S. Federal Reserve. The Fed is posed to increase downward pressure on long-term interest rates to spur the recovery, reviving "Operation Twist," first undertaken in the 1960s.

    Despite the rally in the past week, the MSCI index is still down more than 9 percent since January and the third quarter performance looks set to be the worst since the June-September period in 2010.

    Furthermore, against conventional wisdom, total returns on a 10-year rolling basis on government bonds are higher than on equities. This is providing much food for thought for long-term investors.

    "In a very short term, positive news may come out and policymakers will announce something. Economic data is not as bad as falls in the market would've suggested. So over the next 4-6 weeks we could get slightly higher," said Jeremy Beckwith, chief investment officer at wealth manager Kleinwort Benson.

    "Everyone is hoping policymakers are coming up with good ideas, although it's hard to see what good ideas are... The euro zone is such a huge issue and one day you could wake up and find out Greece has defaulted and get caught out. So our position is to underweight risk."

    The euro rose more than 1 percent against the dollar last week, its biggest weekly gain since July. But analysts expect the single currency to come under pressure again in the coming week as EU finance ministers again failed to eliminate fears of Greek sovereign default at their weekend meeting.

    EU finance ministers broke no new ground in dealing with the euro zone debt crisis and made no decision on whether to give more firepower to the 440-billion euro bailout fund, suggested by U.S. Treasury Secretary Timothy Geithner.

    "The euro zone's medium term structural issues of excessive sovereign debt and banks' exposure remains unresolved," UBS said in a note to clients.

    "Thus investors will continue to worry about the risk of Greece defaulting on its bonds over the next couple of quarters as well as the efforts of Spain, Portugal and Italy to tackle their own public finances. This will also keep investors fearful over the solvency - not just liquidity - of euro zone banks."

    The coming week promises a heavy dose of policy actions.

    Finance ministers of the BRIC emerging countries -- Brazil, Russia, India and China -- meet in Washington on Thursday, on the sidelines of the International Monetary Fund meeting, to discuss steps to offer support to the euro area.

    If they buy euro-denominated bonds -- as suggested in preliminary talks -- this may help turn around sentiment, after the European Central Bank's 70 billion euro operation failed to stop the crisis from spreading to Spain and Italy.

    Investors will also keep a close eye on U.S. President Barack Obama who is presenting a deficit-reduction plan on Monday that will cover the cost of his recent jobs bill.


    There are signs monetary policy is shifting from withdrawing stimulus toward further easing at a global level -- which would also be supportive for asset markets in the long term.

    The Fed has already pledged to keep its policy rate at record lows until at least mid-2013 and, in Operation Twist, may introduce a program involving buying long-dated Treasuries to lower mortgage rates and other long-term borrowing costs.

    The Bank of Japan eased policy in August by boosting asset purchases and the ECB has signaled that it had halted a cycle of interest rate rises begun just five months ago.

    Even in emerging markets, the tightening cycle seems to be nearly over. Brazil and Turkey have cut interest rates, Mexico and Chile's central banks have left the door open for easing, Israel and South Africa are expected to cut rates.

    "Risk markets will rebound when everyone is short risk, the worst is priced in, data stop surprising on the downside and policymakers take decisive counter action," JPMorgan said in a note to clients.

    "Our perception is that most investors are sitting on the fence and that there is no surplus of risk underweight positions... Policymakers across the world will likely try their best to prevent another contraction, and it is here that upside surprises could come from."

  7. #127
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    Post Greek cabinet meets to decide more austerity steps

    (Reuters) - Greek Prime Minister George Papandreou chairs a cabinet meeting on Sunday to decide on more austerity measures to secure continued funding under an international bailout.

    EU and IMF inspectors are holding a conference call with Finance Minister Evangelos Venizelos on Monday to hear what measures Greece will take to plug this year's shortfall in the budget before they release an 8 billion euro ($11 billion) loan tranche it needs by October before it runs out of money.

    Papandreou canceled a planned visit to the United States on Saturday to deal with the deepening crisis at home as euro zone partners made clear further funding for the debt-ridden country would hinge on adhering to agreed fiscal targets.

    "The meeting is set to examine measures from public sector layoffs to more pension cuts," said a government official on condition of anonymity.

    Last week, the government blamed the shortfall on a deeper-than-expected recession and decided to put a new tax on real estate in the hope of collecting about 2 billion euros annually.

    But international inspectors, known as the troika, expressed doubts this one-off tax measure would work and demanded more details on how the government hoped to catch up this year and the next.

    "The troika thinks the recently announced property levy will not suffice to plug the budget hole and is pressing for measures on the spending side -- cuts in public sector wages and employment," said a second government official who asked not to be named.

    The conservative New Democracy opposition has criticized the government for overtaxing the economy and driving it into a tail spin.

    Its leader, Antonis Samaras, called for snap elections on Saturday saying the policy mix was wrong and was not yielding any results despite peoples' sacrifices.

    "A renegotiation with our lenders to restart the economy is a condition to get out of this crisis," Samaras told a news conference on Sunday.

    International lenders are also concerned with the lack of political consensus in Greece on the measures needed to emerge from the crisis.

    The conservatives have been buoyed by growing public discontent after two years of austerity measures and are proposing tax cuts and growth boosting measures instead.

    Papandreou's socialists have a majority in parliament but political analysts say internal dissent and public unrest, such as strikes and violent protests, may force snap elections.

    Lenders have long warned against one-off measures and more taxes as a way out of the crisis shaking the euro.

    They have asked for urgent reforms and privatizations to make the economy more competitive and a reduction in the bloated public sector.

  8. #128
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    Post Obama urges higher taxes to curb deficit by $3 trillion

    (Reuters) - President Barack Obama, in a rallying call to his Democratic base, will vow on Monday to veto any cuts in Medicare if Congress fails to raise taxes on corporations and wealthy Americans to curb the deficit.

    Obama's recommendations to a congressional "super committee" would deliver deficit savings of more than $3 trillion over the next decade, his aides said, with roughly half of those savings coming from higher tax revenues.

    Under fire from Democrats to defend Medicare and Medicaid healthcare programs as he seeks to galvanize supporters ahead of the election next year, Obama will demand that all Americans share the burden of controlling the budget.

    "He will veto any bill that takes one dime from the Medicare benefits seniors rely on without asking the wealthiest Americans and biggest corporations to pay their fair share," a senior administration official told reporters.

    Medicare, for elderly and disabled Americans, and Medicaid for the poor, are viewed by analysts as the biggest contributors to the long-term deficit.

    The so-called super committee of six Democrat and six Republican lawmakers is seeking at least $1.2 trillion in new budget savings by November 23. That is on top of $917 billion in 10-year savings agreed in an August deal to raise the debt limit.

    Obama will lay out his recommendations in the White House Rose Garden at 10.30 a.m. EDT on Monday.

    "In his remarks tomorrow, the president will make clear he is not going to support any plan that asks everything of some Americans, nothing of others," the official said.

    The plan will include a "Buffett Rule," named after billionaire investor Warren Buffett, that would set a minimum tax rate for anyone making more than $1 million a year.

    A clearly populist step, the tax would only apply to a tiny minority of the millions of Americans who file tax returns every year. But White House aides said it would set a standard of fairness that would yield more revenue if it became law.

    Congress can ignore his suggestions. With the House of Representatives controlled by Republicans who oppose any tax hikes, they are likely to be declared dead on arrival.

    Obama's opening bid to find deficit savings by December 23 to head off painful automatic cuts will be under close scrutiny.

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    Post S&P cuts Italy ratings one notch, outlook negative

    (Reuters) - Standard and Poor's cut its unsolicited ratings on Italy by one notch on Monday, warning of a deteriorating growth outlook and damaging political uncertainty, in a move that took markets by surprise and added to pressure on the debt-stressed euro zone.

    S&P's downgraded its unsolicited ratings on Italy to A/A-1 from A+/A-1+ and kept its outlook on negative, sending the euro more than half a cent lower against the dollar.

    The agency, which put Italy on review for downgrade in May, said that the outlook for growth was worsening and there was little sign that Prime Minister Silvio Berlusconi's fractious center-right government could respond effectively.

    Under mounting pressure to cut its 1.9 trillion euro debt pile, the government pushed a 59.8 billion euro austerity plan through parliament last week, pledging to balance the budget by 2013.

    But there has been little confidence that the much-revised package of tax hikes and spending cuts, agreed only after repeated chopping and changing, will do anything to address Italy's underlying problem of persistent stagnant growth.

    "We believe the reduced pace of Italy's economic activity to date will make the government's revised fiscal targets difficult to achieve," S&P's said in a statement.

    "Furthermore, what we view as the Italian government's tentative policy response to recent market pressures suggests continuing future political uncertainty about the means of addressing Italy's economic challenges," it said.

    Berlusconi's coalition has been plagued by infighting and policy disagreements and the prime minister himself has been battling a widening prostitution scandal which has distracted the government and badly damaged his personal credibility.

    On Monday, Italian sources said the government was preparing to cut its growth forecast to 0.7 percent in 2011 from a previous forecast of 1.1 percent and cut the 2012 forecast to "1 percent or below."


    Italy, the euro zone's third largest economy, has been dragged to the center of the debt crisis over the past three months as concern has grown over a debt burden equal to some 120 percent of gross domestic product.

    But the move from S&P came as a surprise as the market had thought Moody's was more likely to downgrade Italy first. Moody's last week said it would take another month to decide on its action.

    "Was it anticipated tonight? No. But again is it really shocking given what yields have done?" said James Paulsen, Chief Investment Strategist, Wells Capital Management.

    Only the European Central Bank, which has been buying Italian bonds to prop up the market, has kept Rome's borrowing costs from spiraling out of control, but yields have crept back up steadily since the ECB stepped into the market in August.

    On Monday, yields on Italian 10 year bonds stood at 5.59 percent, within sight of the levels above 6 percent they reached just before the ECB intervention.

    The intervention has caused growing strain within the central bank, causing Chief Economist Juergen Stark to announce his resignation and prompting open opposition from the Bundesbank.

    The S&P downgrade, which came as Greece struggles to meet demands from lenders for yet more austerity measures, underlined the mounting seriousness of the euro zone crisis, which has seen global markets hammered.

    "It's just more of the same negative news," said Stephen Roberts, a senior economist at Nomura in Sydney.

    "It only adds to the contagion risk over Greece and has encouraged the flight to safety in markets here," he added, pointing to a sharp fall in the Australian dollar on the news. The Aussie dollar is influenced by expectations for commodity prices and so sensitive to the outlook for global demand.

    S&P 500 futures also dropped 0.7 percent and early hopes for a bounce in Asian shares on Tuesday looked to be still-born now.

    European stocks had already slid on Monday, while yields on Italian and Spanish bonds rose sharply on fears of a Greek default, compounded by the failure of EU finance ministers to agree new steps to resolve Europe's debt crisis at weekend talks.

    International lenders told Greece on Monday it must shrink its public sector and improve tax collection to avoid running out of money within weeks as investors spooked by political setbacks in Europe dumped risky euro zone assets.

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    Post Empire Global FX: Gold to clear $2,000 in 2012 as rally cools: LBMA poll

    (Reuters) - Gold's rally will extend beyond $2,000 an ounce in the next year, but won't match the record-breaking 50 percent surge of the last 12 months, according to an annual survey of gold investors and analysts at the world's biggest bullion traders event.

    With no let up seen in the financial markets uncertainty that fanned the safe-haven investment spree, bullion is expected to rise to $2,019 an ounce by November 2012, according to an anonymous survey of delegates at the conclusion of the London Bullion Market Association's (LBMA) annual conference on Tuesday. That is about 12 percent above current levels.

    If history is any guide, the consensus view from the biggest gathering of gold market traders, experts and users may prove too conservative -- for the past three years, prices have outpaced the survey. A year ago delegates predicted gold would rise to $1,450 in 12 months; on Tuesday it hit $1,800.

    Most were optimistic on the outlook in spite of the past month's extraordinary volatility, which has caused some traders to question gold's credentials as a haven of stability. But few expect a repeat of the past year's torrid rally.

    "We've heard so much about the perfect storm that has driven gold to where it is now, that the odds of it increasing a similar amount have to be a lot less," Robin Bhar, an analyst at Credit Agricole, told Reuters at the conference.

    "There are good reasons why gold has been taken to where it has, but can we really assume that those factors are going to remain, for it to power on to $3,000, $4,000? We are assuming global GDP will grow and the fear factors will lessen, so there will be less reason to be owning gold."

    Well over 500 analysts, traders, fund managers, refiners and miners, as well as official sector and wider industry delegates, attended the meeting, one of the most significant in the precious metals calendar.

    Attendance at the meeting has swelled as gold has become an increasingly sought-after asset in recent years, with prices hitting a record $1,920.30 an ounce on September 6. They have since retreated, however, and are down 2.5 percent so far this month after a period of intense volatility.

    The view was largely similar at a simultaneous conference of major gold miners halfway across the continent, in Colorado Springs, where executives from the likes of Newmont Mining Corp (NMC.TO) (NEM.N) and AngloGold Ashanti Limited (ANGJ.J) saw prices rising to $2,200 an ounce and beyond.

    "I'm a big believer that all of the ingredients for a higher gold price are there: geopolitical risk, economic uncertainty, inflation," Yamana Gold (YRI.TO) Chief Executive Peter Marrone said on Monday. "It just seems natural to me for gold prices to go to substantially higher levels."


    Analysts have suggested this volatility pointed to overstretched conditions, but delegates disputed that it marked the start of a deeper correction.

    "The higher levels of volatility is a function of increased economic uncertainty... but it doesn't portend a reversal of the gold market," HSBC analyst Jim Steel, who has a 2012 gold forecast of $2,025 an ounce, said on the sidelines of the conference.

    "The macroeconomic climate remains positive for gold. The fact that there's a high level of volatility in the market doesn't take away from its safe-haven status. You've got to look at it over time compared to paper assets. If it were treated as a currency, it would have outperformed every other currency in the last 12 months."

    John Fallon, president of hedge fund Pia Capital Management, said gold is "in an orbit by itself" among commodities and remains his favorite investment in the sector, due to its high liquidity and the support offered by solid physical demand.

    "Gold still has our undivided interest," he told Reuters at the conference. "We favor both the (gold) ETFs and the actual spot OTC market."

    There were few outright bearish views.

    Christoph Eibl, CEO and founding partner of the $2 billion Swiss commodity hedge fund Tiberius Group, was a rare voice of stern caution, warning that gold could fall back below $1,000 an ounce in line with production costs for miners.

    But even Eibl, who considers himself a converted contrarian after years as an unabashed gold bug, wasn't prepared to bet big against bullion's newfound popularity.

    "We know it's too dangerous to stand in front of a truck that may run you over," he said.

    Unsurprisingly, delegates expected leading gold consumers China and India to remain main demand drivers for the yellow metal, with the World Gold Council estimating that Chinese demand could grow 10 percent this year.

    Chinese consumers are willing to spend more on gold jeweler as product quality and disposable income increase, and due to the investment function of gold, Wai-Chan Chan, a partner at China's OC&C Strategy Consultants, said.


    Among other precious metals, delegates forecast a platinum price of $2,163 an ounce in November next year, giving it a touch more upside than gold from its current price near $1,770 an ounce. Palladium was forecast at $826 an ounce, compared to its current $710.

    Platinum group metals prices will have to rise, or the rand to weaken, to ease pressure on South African platinum miners, Aquarius Platinum chief executive Stuart Murray argued in a well-received presentation on Monday.

    Once tax, royalties, costs and investments were taken care of, he said, shareholders and capital providers were seeing a return of less than 3 percent.

    "The reality is that for us, for the risks that are taken, for the effort that goes into mining an ounce of platinum, returns greater than 3 or 4 percent are needed," he said.

    Delegates forecast silver prices at $47 an ounce next year.

    Silver was favored by Claymore Investments president Som Seif, who argued in a presentation on Monday that rising demand from the industrial and investment sectors and supply constraints argued for higher prices.

    However, analysts said investors were likely to remain wary of silver after its sharp correction from record highs earlier this year. Prices lost a third of their value in the six trading sessions after they peaked near $50 an ounce in April.

    Nonetheless, the Royal Canadian Mint said its silver bullion sales were on track for a 30 percent rise this year, taking them to 25 million ounces.

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