Gold Seen by Polymetal Climbing to Record Above $2,000

Gold may climb to a record above $2,000 an ounce and average between $1,700 and $1,800 this year as investment demand remains strong, according to Russian gold and silver miner Polymetal International Plc.

Central banks adding bullion to their reserves will continue to boost demand this year, Polymetal’s Chief Executive Officer Vitaly Nesis said today in an interview. Bullion rose a 12th straight year in 2012, the best run in at least nine decades in London trading, as central banks from Europe to China pledged more stimulus to bolster economic growth. Central banks bought the metal to bolster official reserves, while investors are holding a near-record amount in exchange-traded products.

“Investment demand remains high,” Nesis said in a phone interview from Polymetal’s St. Petersburg offices. “This year, central banks’ purchases will be the main demand driver.”

Such purchases increased 17 percent to 536 metric tons last year, the most in 48 years, Thomson Reuters GFMS estimate. Holdings in gold-backed exchange-traded products were 2,610.1 tons as of yesterday, data compiled by Bloomberg show, 0.9 percent below the record set Dec. 20.

Bullion, which averaged $1,668.75 an ounce in London in 2012, will average between $1,700 and $1,800 in 2013, and peak above $2,000 during the year, Nesis said. The record was $1,921.15 in September 2011.

Polymetal, listed on the U.K.’s FTSE 100 Index and Russia’s largest silver producer, doesn’t see any trend for investors to switch from gold to silver this year because silver “is a less significant asset in the global financial system,” according to Nesis.

Amursk Facility

Gold for immediate delivery was $1,679.54 an ounce in London trading at 2:22 p.m. local time, up 0.9 percent, and rising for a second day. Silver for immediate delivery was up 1.5 percent to $31.87 an ounce, also rising for a second day.

Polymetal said today its 2012 output rose 31 percent to 1.06 million ounces of gold equivalent. It expects this year to increase output to 1.2 million ounces and sees “moderate risk” of downgrading the target by 5 percent if its Amursk concentrate facility in the Khabarovsk region of the country’s Far East fails to run at expected capacity, Nesis said. Polymetal sees its 2013 revenue at about $2.1 billion to $2.2 billion at current prices, he said.

Polymetal’s shares dropped 2.4 percent to 1,083 pence today.

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