Gold prices are likely to scale new peaks as market fundamentals tighten because producers need at least a 20 percent rise in bullion prices just to make new investment viable, a leading fund manager said on Wednesday.
“Gold mining is a very complicated and expensive business and you really need to see the gold price a lot higher before you see any increase in gold production,” Ian Henderson, who manages around $5 billion at JP Morgan’s Global Natural Resources fund, told Reuters.
“(Gold) should have a sustained price level of over $1,200 an ounce before we see any significant new mine build,” he said.
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His concerns over miners’ margins echoed those of Gold Fields chief executive Nick Holland, who told Mining Weekly the company would need to see a gold price of $2,000 an ounce to replace its infrastructure.