Further decline in Australian gold production during Q1

According to a report published by the consulting firm Surbiton Associates, Australian gold production continued to drop in Q1 – for the third quarter in a row. During Q1 Australian gold producers extracted a total of 62 tonnes of the yellow metal. This is 5% less than the previous quarter and 4% less than the same period last year.

Last summer’s record high gold prices encouraged many Aussie mining firms to start higher-cost gold extraction which results in a smaller number of ounces being produced. Adverse weather conditions at the start of the year also hurt Q1 production.

Last year annual Australian gold production fell by two tonnes from 2010, to 264 tonnes. In February South African gold production dropped by 11.5% in comparison with the previous year. Australia and South Africa are – along with China – the world's largest gold producers. Thus, markets follow their production data with great interest. Continuing squeezes on production will result in upward pressure on gold prices. Central bank gold buying is also providing good support for gold. Dips towards $1,525 should see these institutions step up their buying efforts.