CANBERRA: US gold prices are up 17 per cent since the start of the year and if the pundits are right, prices could be knocking on the door of $US1400 ($1917) an ounce come the end of the year. Canada’s BMO Capital is among those that reckon the charge from the current spot price of $US1272 an ounce to the $US1400 an ounce level is on the cards, saying it is predicated on uncertainty in the global economy persisting through the remainder of the year.
That will drive incremental “safe haven’’ demand. Negative interest rates in Germany and Japan, the expectation that the US Federal Reserve will go slow on rate hikes, and the prospect of a Donald Trump presidency are all working in gold’s favour. Should the $US1400 expectation come to pass, Australia’s gold producers will be enjoying highest (non-inflation adjusted) record prices.
Average all-in sustaining costs of $US833 an ounce — on analysis by UBS of March quarterly reports — puts the Australians as best in class. Those in production are generating free cash flows beyond their dreams of a couple of years ago. So it is indeed a good time to be gold producer, or near-term producer. And it looks like staying that way for the foreseeable future.
