SA miners lead global gold production ramp-up amid record prices
Production of gold from global bullion mines is projected to soar even higher, boosted by surging output from Africa – including South Africa – against the backdrop of higher prices, although producers are being held back from full profitability potential by rising costs and weakening demand.
South African gold producers – such as Harmony Gold, Pan African Resources and AngloGold Ashanti among others – fed into the global gold supply for this year’s second quarter, which recorded a 4% rise to 1 258 tons compared to the same period last year.
Gold prices under the London Bullion Market Association averaged new highs of $2 338 (R42 871) per ounce in the 2024 second-quarter period, representing an 18% jump on the prior year’s corresponding period and 13% firming compared to the previous quarter.
Of the 1 258 tons gold supply for the quarter period under review, mine production accounted for 929 tons, a new record high for the period while supply of bullion from recycling activities “was the highest for a second quarter since 2012” in response to rising global prices of the precious metal, said the World Gold Council (WGC) yesterday.
Moreover, mine production of gold is projected to remain elevated.
“Mine production is still poised to surpass its previous high as the output from several regions – led by Africa – benefits from ramp-ups and expansions, as well as higher grades,” noted the WGC in its second-quarter report looking at the industry.
It added that current all-in sustaining cost margins are also supportive for higher gold production, although Pan African Resources said this week that it expected production costs to soar by as much as 17% for the full year to June 2024.
In terms of recycling, a decline in India, where gold-for-gold exchange and gold loans were more prominent, led to the WGC revising downwards its forecast for the activity for the remainder of this year.
“While India will contribute less to recycling in H2 (second half), Europe’s recycling response to high prices and economic uncertainty in H1 elevates the risk of further selling back of old jewellery stock in the second half of the year,” said the WGC in its report.
It has projected that central bank buying of gold for the full year will likely be lower by around 150 tons compared to last year, with emerging market central bank buying affected by elevated “sanctions and sovereign” risks.
All in all, total gold demand this year is expected to be 4% firmer to 1 258 tons, although higher gold prices had taken a toll on jewellery consumption in the second quarter, with volumes falling 19% y/y to a four-year low of 391 tons.
Retail gold bar and gold coin investment was 5% lower at 261 tons, primarily due to weak demand from Western markets. Gold bar and coin demand is, however, likely to remain on a firm footing in the second half of the year.
Nonetheless, Chinese demand for gold bars and coins could slow down in the second half year period, although “interest remains, given support from economic uncertainty and underperformance” of domestic assets.
“We remain cautiously optimistic on bar and coin demand in general as supportive underlying conditions are unlikely to change materially.”
Source: https://www.iol.co.za/