Dec. 28 (Bloomberg) -- Gold will rise to a record in 2008, increasing for an unprecedented eighth consecutive year, as investors seek protection from accelerating inflation, metals analysts say.

Gold will probably average $800 an ounce, compared with $696 this year, according to the median estimate of 37 traders, analysts and investors surveyed by Bloomberg News. Gold has gained 30 percent to $827.20 an ounce in London this year, its best year since 1979, when the Iranian revolution crippled crude- oil exports and U.S. inflation surpassed 13 percent.

``I do see gold hitting a new high at some point in the first half,'' said UBS AG's John Reade, who is tied as the most- accurate analyst in the London Bullion Market Association's 2007 gold-price forecast.

Gold rose as record oil prices drove up inflation, and supplies from South Africa, the world's biggest producer, dropped to the lowest in 84 years. Mounting losses in credit markets tied to subprime mortgage loans spurred demand for alternatives to stocks and bonds, while the dollar's drop to a record against a basket of trade-weighted currencies boosted investor interest in commodities.

Prices rose to within 0.5 percent of the record high on Nov. 7. The metal rose $1.61, or 0.2 percent, to $827.20 an ounce as of 6:25 a.m. in London. Gold is the second-best-performing metal, after lead, on the UBS Bloomberg Constant Maturity Commodity Index this year. The index of 26 commodities is up 23 percent.

Inflation

U.S. consumer prices increased 0.8 percent in November, the most in more than two years. Inflation in the 13-nation euro region accelerated to 3.1 percent in November, the fastest since 2001, according to Eurostat. Japanese consumer prices rose 0.1 percent in October, the first gain of 2007.

``The two stories for 2008 are going to be the subprime credit crisis and inflationary issues,'' said Ross Norman, director of London-based data provider TheBullionDesk.com and a former trader of physical bullion. Gold may climb to ``pretty well above $1,000 next year,'' he said.

Investment demand for gold may ``easily'' rise to 500 tons, worth about $13 billion, compared with 384 tons last year, said Philip Klapwijk, chairman of London-based research company GFMS Ltd.

``We see the investor base for gold widening,'' he said. ``We're still talking small numbers compared to equity flows or other assets.''

Assets in the StreetTracks Gold Trust, the world's biggest exchange traded fund backed by gold, rose 39 percent this year to a record 627.88 metric tons.

Goldman Sachs

Goldman Sachs International economist James Gutman, who is tied with Reade as the LBMA's most accurate forecaster for 2007, said in a Dec. 11 report that gold will drop to $790 in six months and $750 in 12 months.

``As the U.S. dollar gains strength once again, the price of gold will, in turn, likely decline,'' the report said. The bank recommended selling December 2008 gold futures.

Prices may reach $1,500, surpassing the all-time high of $850 set in 1980, said GoldMoney.com founder James Turk.

``Demand for gold as a safe haven won't disappear, even if the economy picks up,'' said Wolfgang Wrzesniok-Rossbach, head of marketing and sales at Hanau, Germany-based metals refiner Heraeus Metallhandels GmbH. ``People will still put a small percentage of their portfolios into gold.''

Stagnating production may buoy prices. Global output fell to a 10-year low of 2,477 tons last year, according to GFMS. Supply from South Africa declined 7.5 percent to the lowest since 1922 as companies were forced to dig deeper and pay workers more.

Mine Supply

Gold ``is still a positive story, because of mine supply, which continues to be highly constrained,'' said Michael Jansen, an analyst at JPMorgan Securities Ltd. in London.

Prices may gain as much as $100 in 2008, because of production shortages, said Graham Birch, the London-based head of BlackRock Inc.'s natural resources team that manages $40 billion. ``The price needs to be north of $1,000,'' he said. ``$800 is not enough to reverse the gradual decline in production.''

The metal may also benefit from continued restrictions on sales by central banks, the biggest holders. Those sales may slow to 495 tons next year from 583 tons last year, Fortis and VM Group estimated in a report Dec. 11.

The following is a table of gold, silver, platinum and palladium forecasts by company or individual surveyed from Dec. 10 to Dec. 19. The table shows estimates in dollars per ounce.

Company              Gold    Silver     Platinum   Palladium

ABN Amro                $750     $13.65    $1,350     $400
Adrian Day's Asset
     Management         $840
Thomas Au               $800
Barclays                $830               $1,455     $320
Barnard Jacobs          $826
Sanford C. Bernstein    $725     $12.60    $1,408     $350
Chesler Analytics LLC   $820
Citigroup               $750     $15.00
Commerzbank             $850
CPM Group               $813     $15.65    $1,410     $380
Deutsche Bank           $820
Economist Intelligence  $822.50
Stuart Flerlage         $950
GFMS                    $790
Goldman Sachs           $800               $1,513
Yuichi Ikemizu          $780     $14       $1,500     $380
JPMorgan                $814
Nobito Kaneda           $800     $15       $1,550     $350
Kitco Minerals          $740
Kotak Commodity         $880
Logic Advisors          $825
Macquarie               $795               $1,275     $400
Merrill Lynch           $743     $14.96
MF Global               $900
Midas Management        $850
MKS Finance             $850     $15       $1,400     $400
Morgan Stanley          $800     $13.30
Walter Otstott          $890
Jim Pogoda              $725
Prospector Asset
       Management       $725
RBC Capital Markets     $780     $14
Societe Generale        $725     $12.60    $1,350     $300
Standard Chartered      $824     $12.13    $1,445     $323
James Turk            $1,100
UBS                     $760     $15       $1,363     $320
UniCredit               $780
Matthew Zeman           $800
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2008 Forecast:          $800     $14.96    $1,409     $350
(Median)

2007 Average:           $696     $13.38    $1,305     $355

To contact the reporters on this story: Danielle Rossingh in London at drossingh@bloomberg.net; Claudia Carpenter in London at ccarpenter2@bloomberg.net

Last Updated: December 28, 2007 01:40 EST