GFMS says gold could dip in 2010

After topping US$1,200 an oz. in late 2009, Gold could be in for a rough ride during the first half of this year according to gold consultancy group GFMS.

The average gold price should fall in the neighbourhood of US$1,175 per oz. during the first half of 2010, said GFMS chairman Philip Klapwijk during a recent Toronto seminar on the latest GFMS Gold Survey Update 2009.

“That may look like a conservative estimate but on a yearly basis this is quite significant growth,” Klapwijk says.

During 2009 that average gold price was US$972.35, an 11.5% increase from the 2008 price of US$871.96.

But gold could drop into the three-digit range over the next six months – GFMS predicts a range between US$990 and US$1,230 per oz.

“We do think this could be a fairly rough ride,” Klapwijk says. “There is a possibility for a significant correction in the next six months and that’s why we have a low field average for the first half of the year.”

Gold production, which has been flat or falling since its peak in 2001, actually increased 6% in 2009 to about 2,553 tonnes.

Klapwijk says gold production could increase again this year but warns that this is not a trend.

“(It) may look like a departure from the trend but our conclusion is that is not the case,” he says. “In all likelihood production will probably start to decline again in 2012 and onwards.”