Russian Gold Producers Union sees gold price averaging $1450 in 2014
MOSCOW. July 24 (Interfax) - The Russian Union of Gold Producers is forecasting that the average gold price in 2014 will be $1,450 per ounce and that Russia will produce 275 tonnes of the precious metal.
The gold fixing in London on Wednesday was $1,307.50 per ounce.
"We, of course, look to the future with hope, believe that the price will rise somewhat from these levels that are very low for us. Of course, the crisis in Ukraine and in the Middle East - this is now the main driver; gold is a safe haven, a refuge. We, from our point of view, put the average price at $1,450 for this year," union chairman Sergei Kashuba said at a meeting at the Industry and Trade Ministry on Wednesday.
The union's medium-term forecast is $1,300-$1,400 per ounce.
At the end of 2013, when gold prices fell to their lowest since 2010, dropping below $1,200 per ounce, the Union of Gold Producers was more pessimistic. Kashuba said the price of gold could bottom out at $900-$950 per ounce in 2014, or at slightly above $1,000 at best.
The breakeven point for most gold miners is $1,200 per ounce. At prices below this threshold, most small gold mining companies suffer losses. But prices have to remain below this level for a fairly long time in order for companies to go bankrupt and leave the market.
"Short-term, there are no signs to force prices to fall now," the union said in a presentation released on Wednesday. On the contrary, prices are expected to climb in the next six months, driven by the crises in Ukraine and the Middle East, as well as the creation of new types of ETF (exchange traded funds) in New York. One of the reasons for the steep drop of gold prices in 2013 was the massive selloff of ETF by investors.
The union reckons that gold mine production will total 242 tonnes in 2014. Combined with associated and secondary gold production, which is expected to remain at last year's level (16 and 17 tonnes respectively), the overall production forecast for 2014 is 275 tonnes.
Russia produced about 255 tonnes of gold in 2013, so production is expected to grow by about 8% this year.
The growth is expected to be driven by the expansion of capacity at hardrock deposits: Polymetal's Maiskoye and Kinross' Dvoinoye in Chukotka; Seligdar's Podgolechnoye and Ryabinovoye in Yakutia; Polyus Gold's Verninskoye in Irkutsk Region; Highland Gold's Belaya Gora in Khabarovsk Territory; Zapadnaya Gold Mining's Aleksandrovskoye in Trans-Baikal Territory; and Auriant Mining's Tardan in Tuva, among others, Kashuba said in his presentation.
