JOHANNESBURG (miningweekly.com) – The recent gold price spike, which had seen gold trading at above $1 000/oz, was unlikely to be sustainable in the long run, as this had largely been driven by short-term factors, Harmony Gold chairperson Patrice Motsepe said in the group’s 2009 annual report, which was released on Monday.

The gold price had reached a record above $1 070/oz in the middle of October.

Harmony CEO Graham Briggs added that the gold price, in rand and in dollar terms, had been on a roller coaster, with the prices not moving in unison.

He told shareholders that the rand strength had seen the rand gold price decline to R231 000/kg in the past five months of the year ended June 30, 2009, down from R320 000/kg before.

“Observers have commented at length on why the gold price has not continued to rise. I would suggest that the metal – while faring substantially better than other metals during the global economic downturn – has indeed been held back by consumer and investor uncertainty and caution,” stated Briggs.

He added that jewellery demand has also softened and that scrap gold was becoming an important component of gold supply.

However, Briggs said that gold might still exceed $1 100/oz by December with “some upside thereafter”, as production was decreasing and exploration had failed to produce significant results.

In the medium- to -long term, Harmony is using a gold price of $750/oz and R225 000/kg for planning purposes.

Motsepe said that he expected the rand’s volatility to continue.

“Furthermore, even, at the current gold price, there is still insufficient incentive for large-scale gold exploration and development or the investment resolve to embark on massive new mining ventures,” he added.