Gold miners in Australia, motivated by a weak currency, are overcoming inclement weather to dig deeper for more bullion, quarterly production figures released on Sunday show. Third quarter output in Australia, which mines more gold than any other country besides China, climbed 3 percent, or 2 tonnes (64,301 troy ounces) to 75 tonnes from the same period a year ago, despite heavy rainfall that flooded some pits and slowed operations, Melbourne-based Surbiton Associates said in its latest output tally.
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“It was a good performance given the wet weather that took its toll on some of the gold producers,” said Sandra Close, a director of Surbiton Associates. “Overall, local producers have continued to take advantage of the higher Australian dollar gold prices that have prevailed for much of 2016.”
Gold prices spiked to A$$1,760 per ounce in the run up to the US presidential election, reflecting safe-haven bets by investors over the outcome. This followed Britain’s vote to leave the European Union in June, when Australian dollar-denominated gold prices rose to a record of more than A$1,830 per ounce.
“So far, throughout much of 2016, gold has traded in Australian dollar terms mostly between A$1,600 and A$1,800 per ounce and averaged near A$1,700 per ounce,” Close said.
This is a sharp contrast to US dollar gold, which plummeted to 9-1/2-month lows on Friday, and a third consecutive weekly decline, as investors sold on factors including expectations of a US interest rate rise.
A Federal Reserve interest rate hike in mid-December, while negative for US dollar bullion, would likely lead to further weakening in the Australian currency, buffeting local mines, according to Close.
The likelihood of rising US interest rates and some of the proposed policies of President-elect Trump have boosted the value of the US dollar and have seen Wall Street rise to record highs. Both of these factors are negative for gold.
“But the local gold industry has the benefit of the exchange rate effect,” she said.