Gold sector welcomes back $US1300 prices

The gold spot price has moved above $US1300 ($1814) an ounce for the first time since May 2018.

Gold prices hit $US1304.80 on January 26 before dipping slightly to $US1301.62 yesterday.

The price is predicted to hold steady, with analysts such as Goldman Sachs suggesting the 12-month price could reach as high as $US1425, meaning good news for Australian’s mining producers.

Newcrest Mining’s average all-in sustaining cost (AISC) for 2018 across all operations was $US835 per ounce, for example, while Evolution Mining’s recorded just $797 per ounce.

International companies with operations in Australia, such as Canada’s Kirkland Lake Gold, also look set to profit.

Kirkland Lake has set a 2019 financial year all-in sustaining cost (AISC) guidance of $US630–$US680 per ounce.

United States-based miner Newmont Mining — which recently purchased Goldcorp for $US10 billion — meanwhile posted a third quarter 2018 AISC of $US927.

Australian Bullion Company (ABC Bullion) analyst John Feeney said if the price trended as high as $US1425 per ounce over the next couple of years, it would be “fantastic” for local bullion investors and producers.

“Obviously a gold price trending higher is great for producers in general,” Feeney told Australian Mining.

“A lot of large and mid-tier miners in Australia have all-in sustaining costs of around $1,000 per ounce, so we could see some serious cash generated over the next 12 months.”

The slight weekend dip in the gold spot price was attributed to the United States Federal Government’s announcement on January 25 that President Donald Trump was temporarily ending last month’s shutdown of the government.

The five-week shutdown had led to increased demand for the metal during an uncertain economic period that was estimated to cost the US economy $US6 billion according to creditor Standard & Poor’s.

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