The gold market has had a rough go in recent months as gold prices have slumped to $US1,818.50 an ounce.
While gold prices could be on the rise again, some analysts believe there is little hope of recovering the market’s fortunes by the end of the year.
Gold prices are currently at a near three-year low of $US8.83 per ounce.
“There is a lot of pressure on gold, so the market is going to have to take a long, hard look at what’s going on,” Gold Market Analyst Rob Kowalczyk said.
It is understood that gold prices are expected to be hit by the Australian government’s announcement that the national budget is to increase the minimum wage by $2.50 to $10.00 a week, to $14.50 per week.
Gold prices were already in a tailspin after the Federal Government’s $US5.10 billion investment in mining infrastructure and projects in the Kimberley and Kougra.
The Government said the project will create up to 7,500 jobs and create a $2 billion revenue stream for the economy over the next 20 years.
A key plank of the Federal Budget was to create 5,000 new jobs in the mining industry.
Kowalcek said the current rally in gold prices is unlikely to last for long.
He believes gold prices will recover from a price drop of $1,600 a tonne to $2,000 a tonnes in the next two months, but the market has to continue to rally for the next couple of years before gold prices start to recover.
In the meantime, he believes the current trend of gold prices falling has been driven by a lack of demand.
This means gold mining companies are going to be looking for opportunities in China, the world’s largest gold market, and the world is likely to be the next stop on their road to profitability, he said.
Gold market analyst Rob Kamp, of the Gold Market, said the recent drop in gold has been “unfortunate”, but he is confident the market will recover eventually.
“I think the market had a very bad start to the year, but it has now regressed,” Kamp said.
“It’s a long way to go to recover the market, but if it does, the price is going do very well.”
There are still lots of opportunities in the world, but I think the longer it takes to get back on track, the more difficult it will be for the gold market.
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