Mine production is set to rebound over the coming years as higher prices and mergers between major mining companies support supply, despite a decline in the mineable reserves of leading producers, according to Market Intelligence's Metals and Mining Research team. Fitch forecast that global production will rise by over a quarter to million ounces by from Moz in as project development picks up. It expects output to grow at an average of 2. The pandemic nevertheless continues to pose risks to supply, particularly as winter brings fears of further infections.
Russia's largest gold producer, PJSC Polyus, recently warned that disruption caused by an outbreak at its flagship Olimpiada mine in Siberia over the summer could weigh on production as far ahead as and could delay investments. Polyus is the lowest-cost producer among mining companies with large market caps and has the most attractive long-term growth profile, according to UBS analysts, with Barrick Gold Corp.
Polyus stands out for its ongoing development of one of the largest untapped deposits in the world, Sukhoi Log, which is scheduled to begin production in Further waves of the coronavirus and trade tensions between the U.
In short, we see ongoing consolidation around current levels. Thank you. We use this when contacting you to make sure we reach the right person. What is your last name? Gold futures on Friday ended a downbeat week with the sharpest daily fall since mid June, marking the sharpest weekly drop in two months, after the U. December gold GCZ21, For the week, gold fell 2. The employment report for July showed that the U. Economists had forecast , jobs last month.
Meanwhile, the unemployment rate dropped to 5. All week, silver and gold have been pressured by an uptick in the U. In another paper , we documented that prices can be affected by the level of inventories of commodities —meaning how much is being held in storage — and the extent to which people are hedging against their prices going up or down. We found that investors who included gold in their portfolios alongside stocks, bonds and cash were better off in the period from to This was true even after the risk of investment and the transaction costs are taken into account.
Interestingly , this is not the case when investors start adding other commodities, such as cotton, copper and live cattle. This highlights the distinct characteristics of gold and other commodities, to the extent that there is arguably no such thing as a commodity asset class — as I have emphasised, among other commodity investment pitfalls, here.
Instead, gold and crude oil seem to perform distinctly from the rest. Forecasting asset prices has never been easy, however, and investors always need to be cautious.
To the extent that there is more uncertainty to come about the prospects for economic growth, including from COVID, and if low interest rates prevail, gold prices may well continue to rise. The more negative news on economic growth, the greater the increase in the price of gold. Even then, the direction of travel may not be straightforward. If bad news causes stock markets to fall again, investors may well sell off gold and other commodities to finance their losses in other assets.
This will put a downward pressure on gold prices. Palash Ghosh Former Staff. Send me a secure tip. Palash Ghosh.
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