High Gold Output Meets Record Operational Costs as Bullion Rally Cools
Gold recovered on Thursday after the Fed's decision to not hike the interest rates, but it quickly went down again after the trading session on Friday, as high gold output meets record operational costs.
Gold handed back Thursday's post-Fed momentum on Friday, with its spot price slided to $4,042.75 an ounce, while Silver went lower to $57.65 after the trading session on Friday.
The yellow metal has been in a corrective phase for sometime, and despite the selling has somewhat tamed a little bit, it has been struggling to keep up its momentum.
Metal miners have never produced more gold. Mine production actually went up 2% YoY to 966 tonnes in Q2 of this year, an all-time high for a June time period, and higher than the previous record of 948 tonnes. First-half output of 1,867 tonnes also set a record, up 3% from a year earlier.
That being said, the operational costs for the miners have also been going up, due to the ongoing conflict in Iran that hasn't seen any light at the end of the tunnel. Unfortunately, high oil prices cut a lot of the miners' profits.
Jewellery demand also fell 17% to 278 tonnes, though spending rose 14% as consumers bought lighter, lower-carat pieces. Physically-backed ETFs shed 45 tonnes in Q2, while OTC and stock flows jumped 91% to 327 tonnes. Miner-backed ETFs like GDX ETF hasn't been doing much better either.
Related assets: Gold, Silver, Palladium, Platinum