Gold spikes as Russia closes in

Gold

The gold price has risen to its highest point since November 2020 in Australian dollar terms, as tensions between Russia and Ukraine saw investors return to safe havens like Evolution Mining and Regis Resources.

Gold was valued at $2625 per ounce at time of writing, continuing a relatively steady increase since lows of $2200 in March 2021.

World Gold Council (WGC) global chief executive officer David Tait told Singapore finance radio station, moneyfm893, he was confident in gold’s performance for 2022.

“(2022 will) be interesting but the big story, especially later in 2021 was the recovery of consumer demand. Jewellery, bars and coin demand was up across pretty much all, or most, of the major markets,” Tait said.

“As economies continue to recover from the worst of COVID, we expect economic growth and a lot of pent-up consumer demand to remain and be robust in 2022.”

This confidence was partially backed by the return of gold recycling, which forms a large part of gold supply, according to Tait.

“The growth in newly mined gold is naturally limited. It’s very expensive to mine and supply only grows around 1.5 per cent per year on average. Frankly, in my opinion, this is unlikely to change much. But it’s recycling that makes the difference,” Tait said.

“Recycling was down in 2021 because of the lower gold prices – consumers tend to sell their gold when the price is high, naturally.

“The longer-term supply fundamentals will remain constant and robust and as we shrug off COVID… and as consumer confidence returns, I think supply will increase.”

The more than 12-month high gold price followed a similar increase in demand to end 2021.

The WGC found demand for gold reached its highest quarterly level since the second quarter of 2019.

“Gold bar and coin demand rose 31 per cent to an eight-year high of 1180 tonnes as retail investors sought a safe haven against the backdrop of rising inflation and ongoing economic uncertainty caused by the coronavirus pandemic,” the WGC stated.

Likely in response to increased tensions between Russia and Ukraine, shares in Evolution Mining rose 7.9 per cent on Monday, February 14. Regis Resources also rose 7.61 per cent and Silver Lake Resources rose 7.1 per cent.

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