$us 1,500

Lihir says gold could reach $US1,500
LEAH MCLENNAN
October 11, 2009 - 2:34PM

AAP

Australia's second biggest gold company Lihir Gold Ltd says the price of gold could climb to $US1,500 per ounce.

Gold rose to a record high of $US1,062.70 an ounce on the New York Mercantile Exchange on Thursday.

The value of gold has soared in recent weeks as the US dollar experienced weakness, China restocked and investors looked for a hedge against inflation.

Lihir Gold chief executive Arthur Hood said he expected the price of gold to continue to rise.

"There's been talk this week about $US1,500 and I see that as perfectly achievable," Mr Hood told ABC's Inside Business on Sunday.

Mr Hood said the gold price had doubled over the last five years.

"There's been a constant upward trend and we're not surprised by this at all."

He said there were a range of factors contributing to pushing up the gold price.

"On the supply and demand side, there's gently declining mine supply but physical demand for gold is staying constant or actually increasing."

He said buying by central banks was also adding to demand.

"As China's reserves increase, its proportion of gold stays the same, so that in its own right will increase demand from central banks.

"There are a number of central banks who have variously said that they're increasing their percentage of gold reserves and the rate at which central European banks have been selling gold has dropped."

Mr Hood said Lihir, which mines for gold in Papua New Guinea, was also expanding its operations in Cote d'Ivoire in West Africa.

"West Africa is the hot spot in the world now for new gold discoveries.

"We've already added a million ounces of resources in West Africa around our Bonikro mine."

He said Lihir would focus on organic growth and was "not worried about acquisitions at the moment".

Lihir dipped four cents to $3.13 on Friday.