Gold price expected to surge

bullion may break US$1 500 an ounce this year on the back of positive fundamentals.
“The supply-demand fundamentals are reasonably positive for gold and I would certainly hope that that provides at least an underpin for where the price is right now for the balance of the year,” Chief Executive Nick Holland told Reuters Insider.
“Could it break through US$1 500 (an ounce)? I do not know, but it is possible,” he said, when asked what the price of gold might do this year.
Spot gold on Tuesday afternoon was steady around
US$1 427 an ounce, within striking distance of its record US$1 444,40 an ounce set on March 7.
But Holland said the general commodities rally was also exerting pressure on mining costs and factors such as rising oil prices were hitting the bottom line of miners.
“Although gold might be at US$1 420 an ounce today, the industry is not making a huge amount of money and the South African industry in particular,” he said.
Holland said the company was unlikely to pursue any mergers or acquisitions at this stage, given its rich portfolio, but may be opportunistic if something interesting came up.
“We are also blessed with a very large reserve base of 77 million ounces. We do not need to rush out and do anything. We have more than enough for this company to grow,” he said.
To limit its exposure to rising electricity prices and declining output in South Africa, where around half of its production is at the moment, Gold Fields is investing heavily to diversify its portfolio into other markets in West Africa, Australia and South America. Gold Fields said earlier on Tuesday it had offered to buy out the remaining shares of its Peruvian unit in a move to boost the group’s output and to have greater benefit on its investment.
In the future, the company may pursue similar deals with other units where it still does not own a 100 percent stake.
“If you are working very hard to generate value for those mines or operations, you want to try and harness all of that value and not give it away,” he said, adding that those types of acquisitions were a lower-risk investment compared to others.
He also said the company was unlikely to drop its uranium project on the back of the crisis in Japan given that nuclear will not disappear “anytime soon” but he said there was no definite time yet for when Gold Fields may pursue it, as some of its other projects were more lucrative at the moment.
Gold Fields, the second biggest producer in Africa that also operates in South America and Australia, said it was on track to produce 3,5-3,7 million ounces of gold this year. – Reuters.