By Frank Tang
NEW YORK (Reuters) - The price of gold will rise further because of supply constraints and strong buying on the back of a struggling dollar and inflation fears, the world's biggest gold producers told the Reuters Global Mining Summit.
While there is no surprise that gold miners are often bullish on gold, their optimism received a definite hoist on Thursday when U.S. gold futures briefly soared above a historic high of $1,000 an ounce.
Greg Wilkins, chief executive of Barrick Gold Corp (ABX.TO: Quote, Profile, Research, Stock Buzz), the world's top producer, said that a widening deficit due to supply shortage and growing investment demand will continue to underpin the gold market.
"In the longer term, I am actually quite bullish because of the growing supply imbalance. The industry is not discovering as much, and exploration expenditure has gone up quite dramatically in the last five years. And we are not hitting any discoveries. It's abysmal, actually," Wilkins told the Reuters Global Mining Summit.
Wilkins also said that inflation and the Federal Reserve's resolve to cut interest rates would continue to drive prices.
"We have an inflationary environment with the Fed easing, and I think that's going to be, in the next 12 months or so, a recipe for negative real interest rates, which are going to drive the dollar lower and gold prices higher," he said.
Many other miners also say that finding new reserves is one of the biggest challenges the gold industry is now facing.
"We are not replacing the reserves that we're mining, and yet demand continues to grow worldwide. We're going to run out of gold," Goldcorp Inc (G.TO: Quote, Profile, Research, Stock Buzz) Chief Executive Kevin McArthur said of the global gold industry. Continued...
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