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Market Nuggets: Barclays: Production Costs Would Offer Support For Gold Around $1,300/Oz

Tuesday April 16, 2013 8:01 AM

Support for gold can be expected around $1,300 an ounce, as a substantial amount of mine production may be at risk below this, says Barclays Capital. Last year, the average cost of production was $673 and the marginal cost (90th percentile) was $1,104. "Assuming sustaining capex at around $200/oz, this indicates cost support at around $1300/oz, based on last year's data; our global database encompasses 35% of global production," Barclays says. "Should prices dip below marginal cost, around 10% of production under our cost curve becomes cash-negative, representing an estimated 262 (metric) tons of cash-negative gold production globally."