Newmont expects gold price to rebound

New York (Platts)--20Apr2006

The gold rally is not over, despite Thursday's decline, and the market
could reach a new all-time high by the end of this year, according to Newmont
President Pierre Lassonde. Speaking at the company's first-quarter earnings
conference with analysts, he noted that gold prices were normally low in the
spring, but that the market had done the opposite this year by rallying. He
expected a rebound and noted that he would not be "surprised" if by year end
the gold price surpassed the all-time high reached in 1980.
Physical demand for gold had been strong even at current prices levels,
with metal flowing into Iran and other areas of the Persian Gulf, according to
Wayne W. Murdy, chairman and chief executive officer of Newmont Mining. He
noted, during the conference call, that the emergence of exchange traded funds
had also played a role in the firmer tone in gold prices. But, "I think the US
deficit plays a much bigger role in the current gold prices than physical
demand going into Iran and other areas of the Persian Gulf," said Murdy.
Touching on physical demand for gold, Lassonde said that some Italian
jewelry manufacturers had been short gold since the price was around $400/oz.
He added: "They could have some major difficulties going forward."
He said that fabrication demand in India and China "continue to
roll along at 15% to 20% growth rate." Buyers in those countries were not
daunted by a $600/oz gold price because "they look at gold as an investment
and high prices "makes gold more appealing than before." He believed global
fabrication demand could shrink this year, but this could be offset by
growth in the bullion market, as pension and other institutional investors
move into the gold market.
--Ovid Abrams; ovid_abrams@platts.com

 

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