Gold Price May Fall to $350, Barclays Analyst Naqvi Says March 7 (Bloomberg) -- Gold prices may fall to $350 an ounce or less as fewer companies buy the metal to fulfill forward contracts and concerns about war in Iraq ease, a metals analyst told a Toronto mining conference. ``The peak has almost certainly passed,'' Kamal Naqvi of Barclays Capital in London said at the Prospectors and Developers Association of Canada conference, the largest meeting of its kind in the world. ``The gold industry is a little complacent about prices at the current levels.'' Gold for immediate delivery rose 20 percent on the London Metal Exchange last year, peaking at $426.38 an ounce Jan. 9. The price has fallen 5.9 percent since then, closing at $401.25 Friday. Declining gold prices may be troubling for companies such as Newmont Mining Co., the world's biggest gold producer, and Barrick Gold Corp., the third-biggest gold producer, which expect costs to rise as their mines age and they process lower-grade ore. Toronto-based Barrick's production costs rose 8.6 percent last year to $199 an ounce and the company said it expects that figure to be as much as $215 this year. Denver-based Newmont said it expects strengthening of the Australian and Canadian dollars to boost its overall cost of sales this year to between $220 and $230 an ounce, from $203 in 2003. Iraq War Most of the factors that propelled gold prices higher have abated, including concerns about the U.S.-led war on Iraq, slumping equity markets and ``de-hedging'' or the elimination of forward contracts by companies such as Newmont, Naqvi said. ``If the euro stabilizes, or begins to fall,'' Naqvi said, ``gold holdings will be liquidated.'' He didn't convince gold proponents. Grayme Anthony, president of Houston Lake Mining Inc., which is developing a gold mine in northwestern Ontario, said he expects the U.S. dollar to decline further, keeping the price of gold in the $400 an ounce range. Demand for gold tends to rise as the U.S. currency falls because the metal is priced in U.S. dollars and becomes cheaper for investors in other countries. Forecasters at the conference were more optimistic about other metals. Nickel may rise to as high as $7 a pound this year, a 60 percent increase from last year's average price of $4.37, because economic expansion in China is fueling demand for the metal, which is used to make stainless steel, Patricia Mohr, an analyst at Scotiabank Group, told the conference. Copper will probably rise 57 percent to $1.27 a pound. China is now the biggest consumer of copper in the world, Mohr said. To contact the reporter on this story: Joe Schneider in Toronto at To contact the editor of this story: Erik Schatzker at . Last Updated: March 7, 2004 16:44 EST
