World Gold Output to Rise First Time in 4 Years, Australia Says

By Jesse Riseborough

Dec. 15 (Bloomberg) -- Global gold production may rise for the first time in four years in 2009 as China and Indonesia increase output, Australia’s commodity forecaster said.

Mine production may increase to 2,476 metric tons in the 12 months ending Dec. 31, 2009, the Canberra-based Australian Bureau of Agricultural and Resource Economics said today in a report on its Web site. That compares with its forecast for a 3 percent decline for 2008 to 2,400 tons.

“This increase reflects the expectation of some recovery in the grades of ores mined, particularly in Indonesia, and an assumed reduction in unscheduled mine disruptions,” the report said. New mines in China including Sino Gold Mining Ltd.’s White Mountain, will boost production, it said.

The average price of the precious metal may drop 7 percent to $810 an ounce as weaker economic growth cuts demand for a hedge against inflation, the bureau said. Still, that may be offset by investor demand for a haven should there be extended global financial market instability, the bureau said.

Production in Australia, the third-largest gold producer, may fall 1 percent to 224 tons in the 12 months ended June 30, 2009, the bureau said.

To contact the reporter on this story: Jesse Riseborough in Melbourne at jriseborough@bloomberg.net