Gold prices, hovering at historic highs of about $1,000 an ounce, could be headed for a fall next year because supply far outweighs demand, an industry consultant said Monday at a Denver conference.
Demand for the precious metal for use in making jewelry fell 24.5 percent during the first half of 2009 compared with a year earlier, while mine production increased 7 percent, said Paul Walker, chief executive of GFMS Ltd., a London-based research and consulting firm.
Gold prices have surged this year largely because of a boom in investment. Buyers have clamored for the metal amid a decline in the value of the dollar and concerns about inflation.
For prices to remain at current levels, 60 percent to 70 percent of mine production has to continue to go directly into investors’ hands, Walker said during a keynote speech at the Denver Gold Forum at the Grand Hyatt Denver.
“Is that sustainable indefinitely?” Walker asked. “I don’t know.”
He strongly suggested that he didn’t think so, telling industry officials to take “a cautionary note.”
Walker said a bounce in gold demand for jewelry fabrication could help sustain prices.
About 900 people are registered for the conference, which runs through Wednesday.
Andy Vuong: 303-954-1209 or avuong@denverpost.com
