Merrill Lynch Sees Favorable Gold Outlook, Higher Mining Costs

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According to Mineweb.com, Merrill Lynch has forecast spot gold and silver prices to average $675/oz and $13/oz, respectively, during this year.

Merrill Lynch has forecast spot gold and silver prices to average $675/oz and $13/oz, respectively, during this year.

In their analysis published Tuesday, research analysts Michael Jalonen and Anita Soni said, “our favorable outlook for gold is predicated on declining global gold output, lower net central bank sales, a rebound in fabrication demand, and still-strong investment demand.”

Nevertheless, ML analysts also suggested that North American gold miners will still feel the pinch of rising cost pressures, with industry average total cash cost increase of 11.1% to $300/oz. “However, thanks to our forecast for an 11.6% higher spot price, we expect North American gold producers to show improvements in industry profits in 2007.

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