UPDATE 1-Barrick chief says sell off in gold possible-FT

Wed Nov 11, 2009 11:49pm EST

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SINGAPORE Nov 12 (Reuters) - Gold may ease from current record highs but the chances of prices falling below $900 an ounce are slim, the chief executive of Barrick Gold Corp (ABX.TO) told the Financial Times.

"There is no reason why we should expect gold not to sell off," the paper quoted Aaron Regent as saying. "It is a commodity like any other." Gold XAU= shot up to another record at $1,121.60 an ounce on Thursday as a weaker U.S. dollar lifted the metal's appeal as an alternative investment to currencies. Bullion has now renewed record highs for six out of the past eight sessions. But Regent said forecasts of the long-term gold price falling below $900 an ounce were "on the light side", adding that bullion remained susceptible to sell-offs despite its bullish outlook. Barrick, the world's biggest gold producer, has said it might complete the planned closure of its hedgebook announced last month before the end of the 12-month window it had set, adding that it had bought back 1 million ounces of hedged gold in October. [ID:nL2208871]

Hedging allows producers to lock in prices for future output, but the strategy can backfire if prices rise significantly.

"We would have had to do this now or later," Regent told the FT, referring to the buyback.

With gold prices rising towards $1,000 an ounce, Barrick's hedge book had become a negative focus for investors. "They were not going to buy Barrick stock," he said.

The paper gave no further details.

The Daily Telegraph quoted Regent as saying that global output has been falling by roughly 1 million ounces a year since the start of the decade. In addition, total mine supply has dropped by 10 percent as ore quality erodes.

"There is a strong case to be made that we are already at 'peak gold'," Regent told the paper, referring to production.

Barrick sees the potential for record margins in the fourth quarter as gold prices hit new peaks and costs are stable or lower, its chief financial officer said on Wednesday. [ID:nLB204667] (Reporting by Lewa Pardomuan; Editing by Sambit Mohanty)

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