Gold price backed for a long run

Junior miners banking on a continuing higher gold price to either fund more exploration or take the leap to production have been given a vote of confidence. The spot price of gold broke through the US$2000/oz mark and settled this morning at around US$2013/oz. The strong US dollar and higher interest rates kept a heel on the back of the gold price for most of 2022 said resources analyst with Fat Prophets David Lennox. He expected that to unwind over the course of 2023 said Mr Lennox. Fat Prophets analyst David Lennox “The big difference that we've seen in the gold price this time, this time it’s touching US$2,000,” he said. “If you recall, when the first time it ever did touch US2000/oz there were huge calls by the speculative end of the market that it was going to go to $3,000 US /oz, and even 4,000 US dollars/oz and the speculative end of the market very quickly built in earnings prices with those scenarios. “And that's what's really missing this time around we've really only heard calls up to maybe US$2,700/oz so they've been quite subdued. From that point of view, one would expect that there's less speculative interest in the market, and if that's the case, we would probably see more subdued movements in the goal price. “But having said that, but in Australia, we've seen the Australian dollar gold price actually moved through AUD3,000/oz and, and really that's what's been sustaining Australian gold producers and Australian exploration in gold. It's been that fairly consistent high Australian dollar gold price throughout 2022. “Even with the fall in the US dollar, we saw the gold price in Australian dollar terms trading, let's say roughly around AUD2,600/oz plus or minus probably a hundred dollars either side for the whole year, and it's moved actually higher, rather than lower, cracking through AUD3000. “So one would suggest that Australian gold produces and Australian gold exploration are, are having a pretty good time of it.” The pressure to cut interest rates would be a tailwind for the gold prices said Mr Lennox. “Well, it's (The Australian Reserve Bank) actually been the first central bank to pause with its with its April meeting. ‘If it continues down that line and we see one more US interest rate increase for, the next meeting's, not till May, that would see the Australian dollar actually weaken further, and that would put further explosive upside to the Australian dollar goal price. “So one would suspect that until we see the US actually pause, then we would continue to see weakness as somewhat in the Australian dollar. And with that the Australian dollar gold price, we'll probably stay firmly entrenched about $3,000/oz.

Gold price backed for a long run

Industry Queensland

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