Oct 05, 2014 News
Gold prices fell to a four-year low on the world market Friday, bringing fresh worries for local miners who were banking on the shiny metal holding steady.
The Wall Street Journal reported Friday that most-actively traded gold contract, for December delivery, fell US$22.20, or 1.8%, on Friday to US$1,192.90 a troy ounce on the Comex division of the New York Mercantile Exchange, erasing future gains for the year. Yesterday, on goldprice.org, the price for one ounce went down further, to US$1,190.31.
The situation has the Government of Guyana worried about the impact of the falling prices on mining operations and the economy.
Miners themselves are worried because of loans and other debts they have incurred. Many of them had benefitted from the huge windfall from high prices but the crippling drop had caught them in a lurch.
According to Minister of Natural Resources and the Environment, Robert Persaud, yesterday, as part of the continued mandate, his ministry and the regulators, Guyana Geology and Mines Commission (GGMC), have been meeting with the miners to determine the way forward. A number of measures have been proposed and are being studied.
The US$1,200 per ounce has been viewed by miners as one where deep worry would start.
Miners have been warned to bring down costs in order to remain profitable. Labour, fuel and food have been the biggest expense for camp sites with authorities urging for miners to increase their recovery rates.
Last year, gold prices plunged from US$1,800 to around US$1,200 before inching up to the US$1,400 mark.
According to Minister Persaud, President Donald Ramotar will be briefed on the situation even as the situation is being assessed.
“We are viewing the price drop on Friday with concerns. We have taken note of it and are examining a number of measures.”
This latest development comes even as gold declaration remains around 12 percent below the targets.
Last year’s gold declaration was the largest ever at 481,087 ounces. Gold export earning was a massive US$648M as at December 31, last. This year the target has been set for 484,562 ounces.
The less-than-expected declarations have been blamed on hoarding by miners and dealers who are hoping that the price climbs. However, this has been denied.
According to the Wall Street Journal story, the stronger-than-expected U.S. employment data fueled investors’ concerns about how soon the Federal Reserve would raise interest rates.
The price of the precious metal has been sliding for months, as investors keep a close eye on the Fed. Higher interest rates would likely damp demand for gold, which doesn’t pay any interest. The U.S. economy added 248,000 jobs in September, the Labor Department said Friday, beating economists’ forecasts of a 215,000 gain. It was the fastest pace of job growth since June.
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