Precious metals consultancy GFMS Ltd. has thrown cold water on the red-hot gold sector, warning of an "irrational exuberance" in the market and that prices could drop sharply in the years ahead.
In its annual gold survey released yesterday, London based GFMS said the gap between mine production and jewellery demand is getting bigger and suggested that longer-term prices should tumble back to the US$600 an ounce range.
"If you're looking at 2007, mine production was only around 70 or 80 tonnes greater than jewellery fabrication," GFMS research director Neil Meader said in an interview following a presentation in Toronto.
"Next year, that gap opens up to maybe 400 or 500 tonnes. And that, moving forward, we view as unsustainable."
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