The rare availability of this metal and its physical properties have made gold one of the most precious metals in the earth's natural resources. When gold is found in rocks, it is almost always in a pure state. Large pieces of gold are called ‘nuggets’, and tiny pieces are known as ‘gold dust’. Most commonly, gold is measured in unit terms, which is ‘troy ounce’. One troy ounce of gold weighs 31.1 grams. Gold is a quite soft metal, slightly harder than a fingernail. Australia contains both open-cut and underground gold mines, yet most of Australia's gold is produced from open-cut mines.
Consumption Trends of Gold
In the first half of 2023, world global demand declined by 5.6% year over year to 2060 tons, due to a back drop of continuous falling in investment by 31% year over year, partly offset by central bank net buying. The central government and other government’s financial institutions accounted for an increase in buying by 61% year over year to 387 tons in the first half of 2023. As per the World Gold Council data for declared purchases, the majority of the buying covered by China was 103 tons. Singapore accounted for 73 tons, making it the second-largest buyer, and Poland bought 48 tons, making it the third-largest.
Retail investment in gold bars and coins rose year-on-year in the first half of 2023, with investors buying 582 tons. Demand was supported by strong domestic gold prices in China. Due to the high prices of gold, except in China, many other markets experienced a subdued increase in demand.
The world's gold consumption is expected to grow over the medium term to reach about 4,400 tons by 2025. Demand growth is expected to be largely driven by increasing jewelry consumption, with investment demand and technological usage contributing to a lesser extent.
Australia's Gold Export and Production
Australia’s gold exports increased by 7.6% year-on-year to $13 billion in the first half of 2023, which was driven by higher Australian dollar gold prices, which offset a 6.8% decline in export volumes. Australia exported $4.1 billion worth of gold to China in the first half of 2023, up by 28% year-on-year. Australia’s gold industry produced 149 tons of mined gold in the first half of 2023, down by 2.6% year-on-year. The production at Newmont’s 15 tons per year The Tanami project in the NT declined 18% year-on-year to 5.9 tons in the first half of 2023. The production at Evolution’s 2.5 tons per year The Ernest Henry project decreased by 43% year-on-year to 0.7 tons in the first half of 2023. Production at Newcrest’s 20 tons per year Cadia mine in NSW fell by 15% year-on-year to 8.9 tons in the first half of 2023. BHP’s 4.5 tons per year The Olympic Dam project has continued to deliver record gold production; production in the first half of 2023 increased by 72% year-on-year to 3.0 tons.
Australia’s Production Outlook
Australian gold production is forecast to rise from 302 tons in 2022–23 to 312 tons in 2024–25, as significant new projects and mine expansions come online.
(Reference: - Australian Government, Department of Industry Science and Resources, Resources and Energy Quarterly September 2023.)
Frequently Asked Questions (F.A.Q)
What are the factors ultimately affect the gold price fluctuations?
Some of the notable factors that really matter while buying gold from companies in Australia are, for example, the central bank's net gold purchase and currency fluctuation: a stronger USD dominates gold prices. Gold is in general considered a “safe haven” during economic doldrums. The majority of gold prices are catalyzed by demand scenarios, with China, the U.S., and India being the primary buyers.
What are the best gold stocks to buy in Australia?
Zimplats Holdings Ltd (ZIM) has a strong track record of generating shareholders return, reflecting from an attractive delivery of ROE 88.14x. Ore mined volume increased by 1% from the prior quarter. Mined volume increased by 4% from the prior year in the September quarter for the period ending 30 September 2023.
Which gold ETF is best in Australia?
Multiple ASX-listed ETFs track the price of gold. These include: Global X Physical Gold (ASX: GOLD) offers a low-cost and secure way to access physical gold via the stock exchange. Perth Mint Gold (ASX: PMGOLD) is a precious metals enterprise, providing premium gold, silver, and platinum products and services to markets throughout the world. Betashares Gold Bullion (ASX: QAU) is an exchange-traded fund that tracks the performance of the price of gold bullion.
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