Higher gold price fails to spark Australia output

SYDNEY, Dec 2 (Reuters) - Record-high gold prices are doing little to encourage Australia's miners to dig deeper for nuggets, a quarter-by-quarter tally of production showed on Sunday.

Australia produced 61.7 tonnes, or about 2 million ounces, of gold in the three months to Sept. 30, down about 1.7 percent on the June quarter, according to Melbourne mining consultants Surbiton Associates Pty Ltd.

Gold output was in line with the September 2006 quarter.

The Australian gold price hit an all-time closing high of A$939 an ounce on Nov. 26, due to higher U.S. dollar gold prices and the strong Australian dollar.

However, higher bullion prices may have little effect on production levels, as miners took advantage of the high prices to dig less rich grades of ore, said Sandra Close, a Surbiton director.

"Miners could well prefer to extend the life of mines by mining slightly lower grade ore," Close said.

Gold zoomed 33 percent higher this year to a 28-year peak of above US$845 an ounce on Nov. 7, just shy of the US$850 all-time high touched in 1980.

Analysts say investors are abandoning a sinking dollar that, accompanied by rising crude oil, threatens to ignite inflation, reinforcing bullion's reputation as a safe-harbour investment.

Deutsche Bank has lifted its forecast average gold price by 3.6 percent for 2007 and by 13.1 percent next year.