The Federal Government’s chief commodity forecasting body predicts geopolitical pressure will push the price of gold to $US1380 an ounce in 2019 and expects production growth and sustained prices to take its national export value to $20 billion by 2019-20.
The Department of Industry, Innovation and Science’s office of the chief economist expects tensions in the Middle East and political turmoil in Europe could place upward pressure on the price of gold, traditionally seen as a safe haven asset against weakness in the broader global economy.
In the newly released Resources and Energy Quarterly, researchers from the office said they expected mined production in Australia to grow from 303t in the 2017-18 financial year to 314t in 2018-19 and 322t in 2019-20.
They pointed to new supply in the Goldfields from the $500 million Gold Road-Gold Fields Gruyere joint venture in the Great Victoria Desert, Dacian Gold’s Mt Morgan project near Laverton, and the Dalgaranga gold mine in the Mid West as key contributors from 2019 onwards.
The prediction comes despite likely supply disruptions from a major rock fall at Kalgoorlie-Boulder’s Super Pit and ongoing issues at Newcrest’s Cadia mine in NSW.
The office has also identified growing interest from Asian jewellery markets and technology producers as factors likely to push global demand for the precious metal higher.
“The official or government sector is expected to remain a net buyer throughout the forecast period,” the report said.
“The need to diversify central bank reserves is the key driver of many central banks’ growing appetite towards gold.
“Ongoing geopolitical risks are also providing support to higher demand.
“These centre on the Middle East, where a deterioration in US-Iran relations could spark a new tussle between the two countries.”
CVS Price at posting:
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