Despite a major recovery in the precious metal prices, which are up almost 20 percent since January, global gold mine output will remain depressed this year, said a new report by BMI Research.
Analysts forecast global gold production to increase slightly, from 98.4 million ounces (moz) in 2016 to 106 moz by 2020, averaging 1.8 percent growth, as mining companies continue to focus on cost cuts and sale of non-core assets.
In comparison, total bullion output increased by an annual average of 3.2 percent between 2011 and 2015, the reprt said.
“We have turned more positive towards prices due to rising inflation pressures and our view that real rates will remain depressed in developed markets beyond 2016,” BMI said, raising its 2016 gold price forecast to $1,275 an ounce.
They said they expect profitability to return quickly, noting that the most cost-competitive cash costs among top producers are Barrick Gold ($596/oz), Yamana Gold ($596/oz) and Russia’s Polyrus Gold ($424/oz).
China, the world’s second largest gold consumer after India, is expected to ramp up acquisitions and investment in foreign gold mines, as the country’s demand growth far outpaces its own production.
BMI forecasts China’s gold mine production to edge slightly higher, from 16.2 moz in this year to 16.6 moz by 2020, averaging only 1.1 percent annual growth.