Mergers affected ’01 gold price

Several factors combined to make 2001 a difficult year for gold, according to CPM Group. Chief among these were contracting trading volumes in the futures and dealer markets, and consolidation and mergers.

The New York firm’s recently published Gold Survey 2002 states that overall gold market conditions deteriorated in 2001, even as prices rose slightly. From bullion banks, traders and financial intermediaries to mining and the jewelry industry, the market consolidated and contracted.

The price of gold averaged US$271.67 last year, down 3.1% from US$280.44 in 2000. The average price in 1999 was US$279.76.

On a settlement basis, the high for 2001 was US$293 per oz.; the low, US$256.60.

Total supply contracted for the third consecutive year, falling 0.6% to 102.6 million oz.

However, all major sectors of supply are now forecast to expand, with a projected increase of 3.9%, to 106.5 million oz. Mine production could recover some of the ground lost in 2000 and 2001.

Gold sales by central banks are expected to total 11 million oz. this year, down slightly from 13 million oz. in 2001. The major sellers last year were Switzerland and the U.K., as part of their disposal programs.

Total demand for gold declined last year, falling 1.3% to 102.9 million oz. Both jewelry demand and industrial usage contracted, following relatively robust increases in 2000. Demand in India rose 2% to 22.21 million oz.; Italian demand fell 1.9% to 17.15 million oz.; Thai gold usage expanded 9.1% to 15.6 million oz.; U.S. demand declined 24.6% to 7.97 million oz.; and Japanese gold demand rose 3.1% to 5.14 million oz.

This year’s total fabrication demand will likely reach 105.3 million oz., up 2.3% over 2001.

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