Gold Digger: US$1550/oz by 2028? The Australian Government is super bearish on gold, for some reason
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Our Gold Digger column wraps all the news driving ASX stocks with exposure to precious metals.
Any commodity price forecast is a crapshoot, especially a long term one.
The notoriously conservative Resources and Energy Quarterly (R&EQ) released every three months (imagine that) reckons gold will tumble to US$1550/oz by 2028 in real terms (adjusted to take into account the effects of inflation). Here’s an example of what that looks like.
But take that forecast with a pinch of salt. Here’s how R&EQ predictions have fared over the past few years:
You get the point. R&EQ analysts are certified gold permabears and their predictions, historically, have been way off the mark.
“Real gold prices are forecast to fall by 6.1% a year over 2023 and 2024, due to pressure from high real interest rates (as global inflation eases).
“From 2025 onwards, gold prices are projected to decline in real terms by around 1.4% a year, to reach an average of US$1,555 an ounce in 2028.
“An assumed appreciation in the Australian dollar against the US dollar over the forecast period is projected to drive the Australian dollar gold price lower in real terms, from around A$2,700 an ounce in 2022 to around A$2,100 an ounce in 2028.”
A flaccid day for precious metals companies on the ASX, with most major/mid-tier miners inking small losses between 1-4% as investors await the Reserve Bank’s imminent rates decision.
Last week’s weaker-than-expected inflation reading of 6.8% has market participants split over what the RBA will do — pause or raise interest rates again.
A pause would be good for gold stocks.
“Inflation is moving in the right direction, which is the key takeaway, and the board will welcome this reading,” says Josh Gilbert, market analyst at eToro.
“However, the inflation fight isn’t over, and there is still work to do in order to return inflation to the RBA’s target rate.
“Although this number, alongside the global banking concerns, will more than likely give the board a tough conversation around a pause next week, I would anticipate another hike in April before the RBA looks to pause its rate hiking cycle in May.
“[But] even if another hike is on the cards next week, the bottom line is that the end of this tightening cycle is very close.”
The inappropriately named Battery Minerals (ASX:BAT) has completed the sale of its Mozambican graphite projects to Tirupati Graphite (LSE:TGR) for $6.5m in cash and shares.
Those +12m shares makes BAT a major shareholder in Tirupati, giving it exposure to any success the aspiring graphite miner may have.
Meanwhile, BAT will focus on its Stavely-Stawell gold project, down the road from the multi-million-ounce Stawell gold mine in Victoria.
Recent target definition work has identified drill ready gold targets at Stawell including Coxs Find, a strong anomaly beneath disseminated sulphide-associated rock chip gold anomalism, up to 430g/t Au.
Here’s how ASX-listed precious metals stocks are performing:
Scroll or swipe to reveal table. Click headings to sort. Best viewed on a laptop.
Stocks missing from this list? Email [email protected]
Some adventure for fans of both gold and psychology in the wee hours. Two major factors are pushing and pulling with equal force – the price likewise skipping about the $1950 mark but unable to break on through to where Jim Morrison went.
On the one hand the Caixin manufacturers print (PMI) was a disappointment – not quite contracting but neither expanding. Chinese data shouldn’t stop the music but when you import as much gold as the Chinese Communist Party does then someone, somewhere takes note and a small candle of optimism dies out..On the plus side that scoundrel of a USD had a pullback, and that’s something gold enjoys.
Prices have found some decent support, at the $1950 mark, although who’s to say what years of PTSD must be skirted before the $2000 psychological level becomes a more solid reality and less of a pipe dream.
Gold prices have ended the London session between $1950 and the $2k breakthrough 3 times in the last two weeks. The bulls are at the gate.
At 10.45pm in Paris, the Gold Price was at: US$1983.83, up US$15.93 or 0.81%.