big fall in gold price tipped

Not everyone is optimistic re. gold's future direction, it seems.

Here (without any 'editorial' comment) is the view of one such pessimist:

"Aussie govt agency tips big fall in gold price
By: Peter Gonnella
Posted: '21-JUN-04 14:00' GMT © Mineweb 1997-2004



PERTH (Mineweb.com) -- The Australian Bureau of Agricultural & Resource Economics (ABARE) sees the US dollar gold price diving next calendar year (CY). It also envisages significant falls in the Aussie dollar gold price and Aussie gold export earnings in the coming 2004/05 financial year (FY).

The Aussie Federal Government forecaster believes the US dollar will stage a gradual recovery from around the latter part of this CY – in response to a rise in US interest rates and better US economic performance – and in turn cause a steep decline in the gold price, especially in US dollar terms. “An appreciation of the US dollar, together with higher interest rates in the United States (and possibly other OECD countries), is expected to place considerable downward pressure on the gold price,” contended ABARE analyst William Mollard.

Canberra-based ABARE’s commodities outlook released today (Monday) suggests the US dollar gold price may sink 12.2 percent from an estimated average of US$376 per ounce for the current CY down to a sickly US$330/oz in 2005, while the Aussie dollar gold price may retreat 7.2 percent from an average of A$547/oz for the current FY ending 30 June down to A$507/oz in 2004/05.

But Mollard expressed caution in the ABARE gold-related projections. “There remains a probability that the actual increase in US interest rates could be significantly less than current financial market expectations,” he said. “Under this scenario, the value of the US dollar would be weaker (and) the gold price could average higher than currently forecast.”

Meanwhile, ABARE reported that Aussie gold mine production is predicted to climb 7.5 percent to 288 tonnes next FY mainly on the back of the maiden contribution from Newcrest Mining’s giant Telfer operation in Western Australia. However, despite the lift in gold output, according to ABARE, the anticipated lower Aussie dollar gold price and five percent drop in export volumes will conspire to reduce Aussie gold export earnings by almost 11 percent from A$5.3 billion to A$4.7 billion.

And in doing so gold will slip one rung to fourth largest Aussie commodity export by value, behind only coal, iron ore and crude oil.

The outlook isn’t as subdued for the whole Aussie resources sector, which ABARE estimates will generate record export earnings next FY of A$62.95 billion, up a whopping 18.5 percent FY-on-FY, due largely to increased received prices, generally higher export volumes, a more than four percent depreciation of the Aussie dollar versus the US dollar, and continued strong demand from China. If that figure is achieved, it would have snapped a run of four consecutive years of sliding earnings.

Coal, the country’s number one commodity export, is set to be the standout improver and major driver of Aussie export earnings growth in 2004/05, with the value of thermal and metallurgical exports tipped to soar by 44 percent or A$5 billion to a whopping A$16.3 billion.

In addition, the index of unit export returns (based on average realised prices) for Australian mineral resources is forecast to jump by 13.6 percent FY-on-FY"