Oct. 31 (Bloomberg) -- Gold prices may rise for a second week on speculation demand from jewelry makers in China and the Middle East exceeds production by mining companies, a Bloomberg survey shows.

Twenty-two of 43 traders, analysts and investors surveyed Oct. 27 and Oct. 28 from Melbourne to New York said prices will rise. Thirteen recommended selling and eight were neutral. Gold gained 1.2 percent last week to $474.80 an ounce on the Comex division of the New York Mercantile Exchange. The metal, up 11 percent in the past year, reached a 17-year high of $483.10 on Oct. 12.

``In China, there is real physical demand for gold, and the same goes for the Middle East,'' Pierre Lassonde, president of Denver-based Newmont Mining Corp., said in a telephone interview on Oct. 26. There is ``good demand in an environment where mine supply is falling,'' he said. ``That's what's putting prices where they are today.''

Newmont, the world's biggest gold producer, and AngloGold Ashanti Ltd., the second-largest, last week reported declines in third-quarter output. Newmont's gold refinery in Chiasso, Switzerland, will be running at full capacity for at least four months, and the plant is expanding to process even more gold bars into pieces used by jewelers.

Gold futures for December delivery rose $5.70 an ounce last week on the Comex. The gain was predicted by a majority of analysts surveyed Oct. 20 and Oct. 21. Bloomberg's survey has forecast the direction of prices accurately in 45 of 79 weeks, or 57 percent of the time. A futures contract is an obligation to buy or sell a commodity at a set price by a specific date.

Chinese Demand

Lassonde, 58, said he saw evidence of rising demand during a trip to China this month. A Beijing jeweler with annual revenue of $100 million reported gold sales jumped 15 percent this year, with some products up 30 percent, Lassonde said.

``It's very indicative of what continues to happen in China,'' while demand is rising almost 17 percent a year in the Middle East, Lassonde said. ``And on the other side of the coin, supply continues to be challenged,'' he said.

Newmont reported a 6.8 percent drop in third-quarter output, and AngloGold's production was down 2 percent.

At the same time, ``second and third-tier central banks are quietly moving to increase their holdings of gold as a reserve asset,'' said Dennis Gartman, an economist and editor of the Suffolk, Virginia-based Gartman Letter.

Lassonde, also chairman of the London-based World Gold Council, said his trip to Asia included visits to central banks on behalf of the industry group. He declined to give details on the meetings.

Refinery Output

The Swiss refinery Valcambi, 50 percent owned by Newmont, is expanding to process more gold bars and more bars with a higher silver content, Newmont spokeswoman Heatheryn Higgins said last week. The expansion will almost double capacity to process gold bars that are almost pure gold, she said.

The plant is ``booked out for the next four months'' and the company's Australia refinery is facing more competition from China, David Harquail, Newmont's vice president of merchant banking, said on a conference call last week.

November and December are usually ``quieter months'' for gold jewelry demand, Lassonde said. ``September and October are typically the second-best months of the year'' before the Christmas season, ``and January is the best month because of stocking up for the wedding season in India,'' he said.

Jewelers account for two-thirds of gold demand, according to London-based GFMS Ltd., a precious-metals research company.

Outperforming Stocks

Gold has climbed 0.5 percent in October, heading for the third straight monthly gain. That compares with a 2.5 percent drop this month in the Standard & Poor's 500 Index and a 0.3 percent fall in the dollar against the euro. The U.S. 10-year Treasury note last week had its biggest decline since March.

``Treasury prices are declining, and stocks look miserable,'' said John Person, president of Nationalfutures.com Advisory Services Inc., a research company in Palm Beach, Florida. ``Investors seem to be comfortable with holding and even adding to gold positions.''

With the December futures contract trading above the 20-day and 50-day moving averages, gold ``is holding above key support levels,'' Person said. The 20-day moving average is about $473 and the 50-day average is $462.

``The reality is more people are buying physical gold than central banks have available'' to sell, said James Turk, founder of Jersey, British Channel Islands-based GoldMoney.com, which allows people to make payments in gold rather than currencies. It had 4.1 tons of gold, worth about $62 million, stored as of Sept. 30. ``My $500 target is within reach.''

Topping $500

``It wouldn't surprise me if we breached the $500 mark before the end of the year,'' Gregory Wilkins, chief executive of Barrick Gold Corp., the world's third-biggest gold producer, said in an Oct. 28 interview.

Barrick's profit tripled in the third quarter as prices rose, and the Toronto-based company added new mines that helped boost production by 22 percent to 1.51 million ounces. Geoff Stanley, an analyst at BMO Nesbitt Burns in New York, said Barrick's output was below his forecast of 1.55 million.

Speculators trimmed holdings in gold futures for a second straight week, data from the U.S. Commodity Futures Trading showed on Oct. 28, after the close of Comex floor trading.

Hedge funds and other large speculators holding at least 200 contracts had bought 153,352 more gold futures than they had sold as of Oct. 25, the commission said. That was down from 170,424 a week earlier.

     Bloomberg's gold survey asked if prices are more likely to
fall, rise or be little changed in the coming week. The
results were:

               FALL          RISE       NEUTRAL
               12            22         8

To contact the reporter on this story: Claudia Carpenter in New York at Ccarpenter2@bloomberg.net

Last Updated: October 30, 2005 17:03 EST