31/05/07: VM Group predicts sustained high gold price

A report from the Virtual Metals Group (VM Group) and Fortis Bank predicts that the price of gold will go past the $700 per ounce threshold this year.

Although factors such as a dollar recovery could sway things, a lack of supply is likely to bolster the price of the yellow metal, Mining Weekly reports.

Jessica Cross, chief executive of the VM Group, said significant new quantities of gold were unlikely to come on to the market in the next two years, in spite of a large number of junior miners being listed.

"While there is no shortage of junior mining companies listed and seeking finance, we have yet to see the announcement with regard to very large gold projects or regions which will take the primary industry into the next generation," she said.

"Primary mine supply is unlikely to increase sharply in the medium- to longer-term and the major companies still have the problem of reserve replacement."

Factors influencing the worldwide supply of gold include recent political tensions in South Africa, the number one producer of the precious metal.