AME forecasts a total year average gold price of US$1,843/oz in 2022, down significantly from our previous forecast based on the soft demand and inimical monetary policy. Gold price will grow to US$1,950/oz by 2024. This will come as conditions normalise and wealth increases, prompting greater consumer demand from China and India.

AME’s forecast Asia Gold Spot price for the September quarter is US$1,807/oz, also down 4% from the June quarter.

Following the extremely strong March quarter for gold investment which saw global holdings reach near-record levels, ETF flows have reversed in the June quarter. Outflows of -39t were recorded. This reversal came as central banks raised interest rates and tightened monetary policy across the globe. Gold price – with its historical inverse relation with the US dollar – has dropped as the US dollar has strengthened in line with tightened monetary policy. Competition from higher-yielding investments has also seen a shift away from gold.

Demand from central banks has increased to 180t from 90t in the March quarter as geopolitical uncertainty from the Russian invasion of Ukraine continues. However, the majority of central bank demand has come from only a few countries and does not necessarily represent an overall global trend; most central banks, including developed central banks, kept holdings flat.

Supply was up 4% to 21,745koz during the June quarter, driven by increases from Africa and the Americas, as well as brownfield expansions and the reopening of Chinese mines. AME forecasts supply will continue to increase in the September quarter and in 2022 overall.

Gold recycling was down 3% in the June quarter but up 5% on year. Recycling in the first half overall was up 8%, its highest level in a first half since 2016. India, Turkey and European countries saw increases in recycling during the period. China’s recycling was down due to new waves of Covid infections and city-wide lockdowns. AME expects recycling output to continue increasing in 2023, especially as China’s recycling capacity reopens. Greater recycling will reduce the industry’s emissions in the medium and long term.

Gold Fields’ Agnew mine in Western Australia has invested in renewable energy and battery storage to reduce costs and emissions. The gold mine has become the first in Australia to install wind turbines, as part of a new microgrid that includes solar, battery storage and a backup gas turbine. The five new wind turbines have a collective output of 18MW, paired with a 4MW solar farm that contains nearly 11,000 panels.