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TORONTO (miningweekly.com) – The gold price is expected to trend at $1 200/oz in 2015, with no significant catalysts expected to move the gold price higher.
Financial services firm Desjardins Capital Markets on Wednesday published its 2015 precious metals outlook, saying that near-term headwinds for the gold price, such as the US Federal Reserve’s actions and the economic outlook for the US supporting a stronger US dollar, undermined price upside this year.
The gold price would, however, be supported near current levels because of the market becoming more aware of the industry’s true all-inclusive sustaining cost (AISC) base, stronger physical demand from India and potential mine closures at high-cost operations.
“For 2015, we prefer names with healthy balance sheets, low AISC profiles and flexible project pipelines,” report author Michael Parkin noted.
Desjardins forecast an average gold price of $1 200/oz in 2015.
The firm believed the key themes that would impact the gold price for better or worse this year included the potential for the US Federal Reserve to start raising interest rates and US inflation levels remaining low, growing demand from India, possible mine closures of higher-cost operations and safe-haven buying for geopolitical reasons.
The spot gold price on Wednesday closed at $1 212.5/oz in New York, after jumping to its highest since December 15 at $1 222.40/oz on Tuesday, as equities fell on concerns over Greece's future in the eurozone.
Parkin said certain criteria could help some companies outperform others, including the ability to generate free cash flow and improve the financial health of their companies, new low-cost production growth coming online and benefits from existing mine optimisation or cost-reduction programmes.
Desjardins touted “high conviction” names of companies it covered, such as Agnico Eagle, Detour Gold and Mandalay Resources, based on these criteria. The firm also said Romarco Minerals, with its Haile gold mine project, in South Carolina, was offering a high internal rate of return, having advanced the project through the permitting process over the past year, positioning the company as a potential takeout candidate.
In 2015, Desjardins expected silver to average $17/oz, 4.6% above the current spot price of $16.20/oz.