JP Morgan raises 2008-09 gold price forecast

JP Morgan said on Wednesday it is raising its price forecast for gold for 2008 and 2009 on expectations investors will buy into bullion as a haven from risk.

However, it is trimming its expectations for platinum, palladium and silver prices on fears over falling demand for the more industrial precious metals.

The bank now sees gold prices at $904 an ounce in 2008, against a previous forecast of $884, and at $875 an ounce next year, up from $854 previously expectated.

"Gold and silver should continue to benefit from safe-haven related interest," JP Morgan added in an emailed release.

Nonetheless the bank revised its silver prices lower, to $15.40 an ounce from $16.10 in 2008 and to $12.30 from $12.50 an ounce next year.

It made deeper cuts to its forecasts for platinum group metals prices. It cut its 2008 forecast for platinum by 5 percent to $1,611 an ounce, and its expected palladium price by 4 percent to $354 an ounce.

For 2009, it slashed its palladium price forecast by around a third to $225 an ounce from $338, and cut its forecast platinum price to $1,123 from $1,275.

Prices of both platinum and palladium have more than halved from the highs hit earlier this year. (Reporting by Jan Harvey; editing by Editing by Peter Blackburn)