Gold producers’ average total cash costs jumped 19 percent to a record $727 an ounce in the first half as output was little changed, Thomson Reuters GFMS said.
The average cash margin dropped to $872 an ounce in the second quarter from as much as $1,032 an ounce in last year’s third quarter, as the average all-in cost of production climbed to $1,050 in the first half, the London-based researcher said today in a report. Output rose 0.1 percent to 1,366 metric tons in the first half from a year earlier and second-half supply will rise 1.7 percent year-on-year to 1,482 tons, GFMS said.
The average grade of ore processed globally dropped 23 percent from 2005 through the end of last year and will probably decline another 4 percent this year, GFMS estimated. Peru’s gold output rose 6 percent to 97.2 tons in the first half, beating South Africa and Russia as the fourth-biggest producer in the period. Russia and South Africa were the fourth- and fifth- biggest miners last year, after China, Australia and the U.S., according to GFMS.
Producers reduced gold hedges by 8 tons in the first half and will cut forward sales by another 12 tons in the second half, compared with 11 tons a year earlier, the researcher said. Miners can sell future output at fixed prices to secure loans and may cut hedges by buying back contracts, adding to demand.
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