Barrick Stays Bullish as Gold Prices Head for Third Annual Drop

  • Sees insufficient supply, central-bank demand spurring rally
  • Company also predicted higher bullion prices last year

Gold, headed for a third straight annual decline in the longest slump in 15 years, will rebound as early as 2016, according to the world’s biggest producer of the metal.

Purchases from central banks and supply that’s insufficient to meet demand will help spur the turnaround, Kelvin Dushnisky, president of Toronto-based Barrick Gold Corp., said in an interview. Barrick on Thursday reported third-quarter earnings that beat analysts’ estimates as lower costs and higher production helped offset weak metals prices.

“Even beginning next year we could start to see an increase in the price,” Dushnisky said by phone. Gold is facing some “choppiness” in the near term, “but medium and longer term we’re very bullish,” he said.

Bullion slumped more than 5 percent in the past year as the U.S. economy gained momentum, curbing demand for the metal as a store of value and fueling concern that the Federal Reserve will boost interest rates. At the same time, financial and political turmoil elsewhere is fueling purchases from central banks. Russia boosted buying for a second month in September, adding the most metal to its reserves in a year.

This isn’t the first time the company has predicted a gold rally. In March 2014, then Chief Executive Officer Jamie Sokalsky said the metal would rebound on purchases from China after “an overshoot on the downside” amid selling by exchange-traded funds. Sokalsky predicted gold could rise toward $2,000 within three years, or about 50 percent more than its price at the time. Bullion has since dropped 14 percent.

Prices declined to the lowest in more than two weeks on Thursday after U.S. policy makers signaled that an increase in interest rates is still on the table for this year. Higher rates curb the appeal of gold because the metal doesn’t pay interest or give returns like assets such as bonds or equities.

Gold for immediate delivery dropped 0.8 percent to $1,146.65 an ounce at 2:34 p.m. New York time, after touching $1,146.01, the lowest since Oct. 9.

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