Newmont sees $525 gold by Jan.
Thu Jun 9, 2005 01:24 PM ET
NEW YORK, June 9 (Reuters) - The price of gold should rise to $525 an ounce by the start of 2006, a top executive of gold giant Newmont Mining Corp. (NEM.N: Quote, Profile, Research) said on Thursday.
Pierre Lassonde, president of the world's largest gold mining company, cited an expected decline in the U.S. dollar by another 15 percent against a basket of currencies, world economic growth strong enough to keep physical demand buoyant and a continuing gradual decline in gold output.
Speaking at the Reuters Mining Summit, Lassonde said consumer and investor demand for gold is tenacious at current prices and world production is in a decline, which should hoist gold out of a current "$400 to $475 range."
"When you add it up, we think you can see gold at $525 by Jan '06," he said to reporters at Reuters offices in New York.
"The physical market is very strong at these prices. There is enormous demand," Lassonde said.
Investors are buying gold as well, in favor over the euro and the dollar, he added, with bullion making its way into vaults in Switzerland and heading into the Middle East, India, China and Turkey.
"Those are the big markets right now," said Lassonde.
Newmont expects gold production to fall by 0.5 to 1 percent this year and next, while the company's own output growth, as the leading worldwide producer, should be 4 to 5 percent over next three years, the executive said.
Spot gold
A dip below $425 in the last month was primarily due to slowing demand for jewelry from India after the busy March-to-May wedding season and decreased buying by Italian jewelers before summer holidays begin in July, he said.
Still, the market has recovered from repeated attempts to press it below $415 because of solid demand, said Lassonde.
Bullion hit a 16-year high of $456.75 last December on the back of a falling dollar, which tends to make the U.S. currency-priced metal cheaper for non-U.S. investors.
"We believe that the dollar trade-weighted index has another leg down to go, another 15 percent, mostly against the Asian currencies. We think we're going to see a great deal of that happening in the next nine months.
"If we see a revaluation of the (Chinese yuan), I would think gold sales would increase even more substantially" throughout Asia, Lassonde said. (News from the Reuters Mining Summit will be delivered throughout the day Wednesday and Thursday to Reuters terminals and to the Reuters.com Web site, http://reuters.com)
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