In its latest survey, released in April, London-based Gold Fields Mineral Services (GFMS) predicts that gold prices “will probably be locked within a range of US$265 to US$305 for the rest of the year.”
Gold Survey 1999 points out that 1998’s average gold price of US$294 per oz. was the lowest since 1978, and that, in real dollar terms, gold dropped back last year to where it was in 1972.
The outlook for 1999 isn’t pretty either. GFMS points out that inflation and world gross domestic product are expected to remain at low levels, and that the effect could be unfavourable for the gold price.
Even with prices at historic lows, mine production continued to grow last year by 3% to 2,555 tonnes.
In 1998, only 2% of the reporting mines had cash costs above US$294 per oz., and so the number of mine closures was lower than some had predicted. However, the 1998 results reflect currency gains in Australia and South Africa, as well gains realized by hedging programs.
Gold prices have continued to slump this year, which may push more producers into the red, particularly as hedging positions are unwound.
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