A reduction in Western Australian (WA) natural gas output following a recent explosion is likely to result in higher gold prices, it has been claimed.

Gas plant operator Apache Corp has warned that it may not be able to resume delivery for two months, Bloomberg reports, with some of Australia's biggest gold mining firms looking at alternative ways of powering mines as a result.

Mark Pervan, senior commodity analyst at Australia & New Zealand Banking Group, said that the news is likely to have a significant impact on the gold mining industry - which may in turn bring a boost for gold investments.

"Certainly the gold and base metal operations will be impacted," he remarked, adding: "What this will emphasize is a higher floor in prices."

The news comes after Surbiton Associates published a report indicating that Australian gold production fell to lowest level in almost two decades during the first quarter of 2008, the Age reports.

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