Newcrest Mining is upbeat on a recovery in the price of gold despite declines which have seen gold stocks punished in the market.
CEO Greg Robinson says global demand for physical gold remains strong and it’s getting harder to produce the metal.
“Central banks are continuing to buy gold and physical purchases are still very strong, especially in China and India,” he told the company’s annual general meeting.
“I believe the gold price is currently being dominated by very short term large volume paper trading on the COMEX futures exchange which is linked to anticipating a decision on when the US Federal Reserve will taper its expansive monetary actions.
“Eventually this trading speculation and rumour around the Federal Reserve tapering should conclude and I think the gold market will again focus on gold’s primary purpose as a risk diversification asset to currency, interest rates, inflation and political risk.
“With strong physical demand for gold, supply restrained and economic drivers remaining vulnerable, I think the external conditions remain positive for the gold price outlook.”
Newcrest says its operations are still profitable at lower gold prices but it continues to concentrate on reducing costs at its mines.