Fund manager predicts new highs in gold prices

A leading fund manager has predicted that gold prices are likely to hit new highs in the future because market fundamentals are tightening.

Ian Henderson, who manages around $5 billion at JP Morgan's Global Natural Resources fund, has explained that the current landscape is ideal for investing in gold.

He stated that his view is underpinned by the fact that producers require a rise of at least 20 per cent in gold bullion prices to make new investment financially viable.

"Gold mining is a very complicated and expensive business and you really need to see the gold price a lot higher before you see any increase in gold production," he said.

"(Gold) should have a sustained price level of over $1,200 an ounce before we see any significant new mine build."

Such sentiments have been backed up by Nick Holland, chief executive of the world's third largest gold producer Gold Fields.

He claimed in a recent interview with Mining Weekly that the company needs the gold price to rise to $2,000 per ounce in order to replace its existing infrastructure.

Mr. Henderson added: "We love gold. We have a substantial part of our portfolio in gold mining companies.

"I think the gold price will surpass its previous peak."