On Tuesday gold regained its footing after dropping to a near six-month low yesterday as financial markets continue to gyrate following Donald Trump’s victory and its likely impact on US interest rates, economic growth and inflation.
Gold for delivery in December was exchanging hands for $1,225.50 an ounce, in pre-regular hours trading on the Comex market in New York. Should gold close at these levels it would be the first up day for the metal after six sessions of declines. Gold has lost more than $100 an ounce after an initial surge on election night last Tuesday.
A new report by BMI Research, a Fitch company, sees a strong recovery for the gold price from today’s levels with the precious metal forecast to average of $1,400/oz in 2017 and $1,500/oz by 2020 (gold averaged $1,160 last year).
The research firm predicts the global gold mining industry will experience solid production growth, supported by rising prices and improving operational costs over the coming years.
BMI forecast global gold production to increase from around 100 million this year to 103 million ounces next year. By 2020 production is set to reach 110 million ounces, averaging 2.5% annual growth.
While a steady pace of growth, this represents a slight deceleration in growth rate compared the previous four-year average of 3.7% says BMI.
BMI believes major Chinese firms will ramp up investment in foreign gold mines, as the country’s gold demand growth far outpaces that of production with the latter predicted to grow only 0.6% per year to 16.6 million ounces by the end of the decade:
World number two gold producer Australia’s is set for robust production growth with a weaker Australian continuing to boost the gold sector. BMI forecasts Australia’s gold output to increase from 12.5 million in 2017 to 13.9 million ounces by 2020, averaging 5% annual growth.
According to the report the US gold sector is predicted to experience modest production growth in 2017 but a stagnant industry environment thereafter to produce 6.6 million ounces in 2020, slightly below the tally forecast for next year.