Gold holds its ground as AngloGold boss predicts it will hit $US2,000
Link copied to
Gold remains in a holding pattern with prices bouncing up and down around the $US1,700 mark. But AngloGold Ashanti chief executive officer Kelvin Dushnisky reckons it could rise beyond $US2,000 an ounce.
While gold slipped to $US1,697.40 per ounce — or about $2,617 per ounce in Australian dollar terms — on Monday due to the stronger US dollar, analysts say the low level of speculative interest also reduces the likelihood of a sell-off.
Speaking during a virtual media roundtable, Dushnisky said the quantitative easing being implemented globally along with the likelihood of interest rates being lower for longer meant there was every chance that gold prices could push past $US2,000 an ounce.
“That would not come as a surprise to me at all,” he added.
Meanwhile, CMC Markets analyst David Madden said continued tensions between the US and China as well as the prospect of a second wave of COVID-19 infections as economies began to re-open had provided a floor that prevented gold from falling further.
Commerzbank analyst Carsten Fritsch told Kitco News that gold prices could climb noticeably if speculative investors were to jump in and that there was good reason for them to do so.
“They just need to look at the extremely expansionary measures taken by central banks and governments, which will lead to a massive increase in balance sheets and national debt levels,” he explained.
Analysts previously noted that signs were pointing towards a gold price breakout, pointing to the continued high US jobless claims and the US Treasury Department’s borrowings for stimulus programs to date.
Dushnisky’s prediction just adds to the bullish sentiment around where the gold price is headed.
The prospect of higher gold prices is likely to be music to the ears of aspiring producers like Horizon Minerals (ASX:HRZ) which is aiming to produce first gold from its Boorara gold mine, 10km east of Kalgoorlie, by July 2020.
Site establishment and mobilisation of the mining fleet for the first stage of the project is complete with first ore delivery to the mill expected in June 2020.
Horizon has an ore treatment agreement in place with Golden Mile Milling for ore processing at the nearby Lakewood Mill.
Boorara ore will be processed in monthly campaigns under the company’s supervision to enable mill grade reconciliation data to be compared against its reserve and resource models.
The company expects to produce between 8,500 and 9,000 ounces of gold at an all-in-cost of between $1,650 and $1,690 per ounce during the six-month mine life of Boorara stage one, generating about $7.1m in free cash flow during the 2021 financial year at current gold prices.
Meanwhile, Bardoc Gold (ASX:BDC) has outlined plans to start mining at its namesake 3.02-million-ounce project near Kalgoorlie in the third quarter of 2021.
The company is targeting completion of the definitive feasibility study by the first quarter of 2021 and has engaged international mining consultants Entech to re-optimise the open pit deposits using an Australian dollar gold price of $2,000 per ounce.
This move has the potential to enlarge the size of the open pits from what is proposed in the current pre-feasibility study mine plan.
Other impending milestones include a resource update in the third quarter of 2020 and securing a concentrate offtake agreement in the fourth quarter.
The high gold prices — especially in Australian dollar terms — have proven to be a boon for gold players, with West African Resources (ASX:WAF) joining the producers club in March after pouring first gold from its Sanbrado project in Burkina Faso.
Capricorn Metals (ASX:CMM) also has a project map in place for its fully funded Karlawinda gold project in Western Australia that will see commissioning begin in the March 2021 quarter.