London (Platts)--1Dec2008

With Iran and Venezuela reportedly failing to tow the line on production
cut levels, international oil producer organisation OPEC is struggling to
maintain decorum among its members, creating difficulties for the group as it
tries to decide on a production cut benchmark to bolster oil's crumbling
price, reports suggested Monday.

The news prompted many gold observers to suggest that the yellow metal
should take some direction from black gold and head further down.

Dresdner Kleinwort analyst Perter Fertig told clients in a research note:
"Gold trading will be strongly influenced by the movement of crude oil today.
At their summit in Cairo, which was planned as an informal meeting, OPEC kept
its production quota unchanged. However, the statement provides a strong
indication for an output cut at the regular meeting on December 17 in Algeria.
As usual, the market got ahead of itself and priced in a decision to reduce
production for the Cairo meeting. The market is correcting its assessment and
crude oil declined to $53/barrel after hitting $56/barrel last
Friday. This is a negative factor for gold."

"Prices have come under pressure as the dollar strengthens and oil
weakens following the delay of the OPEC meeting where production cuts were to
be decided. South African gold production continues to slide with mines
producing 1.97 million oz in Q3, down 2.1% from the previous quarter, and
16.2% year on year. Output was adversely affected by power shortages and
safety closures," Fairfax investment bank told clients in a research note.
Gold held its head firmly above the $800/oz level last week, spurred by solid
physical demand. Still, by Monday's morning fix in London the metal languished
below $800/oz to fix at $795.50/oz.

Standard Bank analyst Walter de Wet told clients: "Global gold mine
supply, led by South Africa, has been in a steady decline since 2001." He
added: "As for crude oil, OPEC decided at the weekend to postpone any decision
on production cuts." The analyst added: "Ahead of the weekend, the market
seemed split on what OPEC might decide; therefore, crude oil prices could move
lower today." By 1115 GMT Monday ICE Brent was spot bid at $51.23/barrel. The
dollar was seen at $1.26 against the euro. Regarding gold, Standard sees
primary support at $811/oz, with secondary support at $805/oz and $795/oz.
Resistance is at $822/oz, $827/oz and $837/oz.

BNP Paribas analyst Michael Widmer took a more bullish stance: "The
liquidation of positions by institutional investors has played the dominant
role in driving gold prices back from this year's highs of $1,030/oz into the
low $800s at present. A further liquidation in long positions remains
possible. Yet, as we move deeper into 2009, we expect selling momentum to fade
out, with concerns over the health of the global economy likely attracting new
buyers into the market."

Thebulliondesk.com analyst James Moore,also made bullish noises: "The
week ahead is likely to see trading conditions remain choppy and volatile,
particularly with interest rates announcements due from the ECB and Bank of
England ... Short-term the outlook is a little mixed ... Long-term though we
still remain bullish towards gold as the sheer scale of bail-outs by the US
Treasury will ultimately down-grade the dollar."
--Ben Kilbey, ben_kilbey@platts.com