TD Newcrest has made a new long-term gold price forecast of $800 an ounce - a figure it says may be needed to support the struggling mining sector.
Analysts at the firm have revised their forecast from $550 to the new figure as a result of its increasingly currency-like characteristics, the Globe and Mail reports.
Global gold mining production has declined in recent years, resulting in South Africa being toppled from its position as the world's leading gold producer and output in some nations falling by as much as 17 per cent last year, according to GFMS.
In a note to clients, Steven Green of TD Newcrest said that certain mining companies need a gold price of $680 per ounce at least to push returns on big projects to over ten per cent.
"This lends support to our view that a long-term $800-an-ounce gold price is a distinct possibility and, in fact, may be required to reverse the flat-to-declining global mine production levels ... evident since 2002," he stated.
However, if gold output continues to fall, those investing in gold may see their own returns increase significantly.
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