In mid-May, the gold price found a balance in response to the tug of war between rising interest rates and a high-risk environment. The latter was the combination of persistently high inflation as well as the prolongation of the conflict in Ukraine and its possible spill over effects on global growth.

Gold's status as a safe haven and inflation hedge provided support in 2022 as the yellow metal battled against the headwinds of a strong US dollar and the US Federal Reserve's attack on inflation. During the June quarter, US inflation reached a four-decade high of 9.1%, the US dollar index jumped 6.5% and gold investment was down 28% on year.

In the September quarter, demand for gold was up 2.5% on-quarter, reaching 24.5Moz. A significant chunk driven by central banks, which appear to be turning to gold as a store of value. Central banks bought 399t in the September quarter, which is up 341% on year and a record quarterly amount. The pace at which central banks have accumulated gold reserves this year has not been seen since 1967.

The gold market saw another positive move early in November following midterm US election news after preelection polls pointed to the Democrats losing the House and Senate. Successful holding of the Senate by Democrats provides some opportunity for avoiding a complete halt to enacting legislation. This has led to a perceived reduction in macro-uncertainty and legislative risk and provided a slight boost to gold.

The latest hawkish Federal Reserve of 50bp has knocked gold back below US$1,800/oz, but the precious metal is starting to retrace its gains and its setting itself up for a healthy start in 2023.

ETFs

Gold-backed ETFs lost out overall in 2022, with net global outflows of 82.7t (-US$2.4bn). Losses were eased by inflows in the March quarter with 274t (US$17bn). The outflow trend started in May (-52.3t) and continued along the year. The outflows were primarily driven by negative flows from North American funds with -81.4t (-US$3.3bn) but eased from European funds which saw inflows of 19.4t (US$2.1bn). The outflows from North American funds reflected decreased investor demand for gold, increasing the opportunity cost of holding gold. Negative flows also reflected the declining price of gold during this period.

Production

AME forecasts 2022 global gold supply to rise by 1.63% to 113.2Moz, driven by increases in gold output from China, Australia, and North America. China’s gold output increase is expected to be 0.24% in 2022 owing to the gradually return to normal of mining operations in the Shandong province, after operations were suspended for safety inspections in 2021.

The world’s largest gold producers – Newmont Goldcorp, Barrick Gold and Agnico Eagle Mines – are expected to produce a combined 13.7Moz of gold in 2022. Within existing ownership arrangements, Newmont and Barrick are expected to maintain its respective position over the short term. However, Agnico Eagle is expected to be over passed by PJSC Polyus.

Several additions to gold supply from large-scale commercial mines are expected in the short to medium term, particularly in Canada. AME forecasts medium-term mined gold production to peak in 2023, after which a weak project pipeline is expected to see mined output decline as a result of reduced greenfield exploration spending and the winding down of colossal mines.

In addition, a spike is expected in artisanal mining in the short term, driven by countries with high ratios of small-scale mining like Sudan and Uganda seeking to profit from the rising price of gold. Scrap production, linked closely to the resale value of gold, is expected to rise in the short term on the back of a forecast rise in prices.

Closures and Production Cuts

Chile’s Supreme Court ratified the definitive closure of Barrick Gold’s Pascua Lama gold and silver project, located on the border with Argentina. The project intended to build the largest open-pit gold and silver mine in the world, with an expected mine of life of 20 years. It was initially expected to cost US$8.5m and be operational in 2014 producing about 615koz of gold and 18.2Moz of silver. The project was the subject of an extensive legal dispute, leading the firm to halt operations before opening due to increased costs and criticisms from shareholders.

In Canada, Pure Gold Mining suspended operations at the mine and has placed it on an undefined care and maintenance as the mine has not achieved yet consistent positive cash flow to alleviate the company’s financial problems. The company obtained an initial order for creditor protection from the British Columbia court.

Consequently, Pure Gold revoked its production guidance for the December quarter 2022, which was previously set at 9koz-12.5koz. The Pure Gold mine, located in Red Lake, Ontario, first began production in 2021 after the successful construction of an 800tpd underground mine and processing facility.

The Australian’s largest gold miner Newcrest reported a 17% gold production decrease during the September quarter, following a series of planned maintenance shutdowns at its mines. The company produced a consolidated of 527koz of gold and 32.5t of copper during the quarter.

Aurelia Metals will end production at its Hera underground mine in NSW, Australia towards the end of March 2023. The decision was made earlier than previously planned following two quarters of negative cashflow from the operation.

A revised mining plan at Hera will now sequence the highest value ore within the remaining available ore sources to maximise cash generation. The company intends to use the substantial installed infrastructure, including process plant, mine workers camp, tailings storage facility, workshops and core processing facility, for the capital efficient development of the company’s Federation project.

New Mines, Restarts and Expansions

In March, Orla Mining begun commercial production at its Camino Rojo oxide gold mine in Zacatecas state. The project is an open-pit heap leach operation with Mineral Resources expected to sustain mine life for 6.8 years. Camino Rojo will produce an average of 94koza of gold and 597koza of silver.

In November, Asante Gold declared commercial production at its Bibiani Gold mine located in Ghana, following three months of consistent production. First gold was poured in July, two months ahead of schedule. All process plant and mine facilities have been operating on a 24hpd basis from late June, with approximately 220kt of ore processed in September and about 206kt of ore in October.

The company aims to produce about 175koz of gold in the first 12 months of operations, ramping up to 220kozpa in the second year and 200-255kozpa for years three to eight.

In Australia, more than 100 new gold projects are currently under development in Australia, which are expected to contribute more than 1,166koz to production by 2025.

During 2022, Red 5’s KOTH gold project successfully started production on 16th December. For the first half of 2023, Red 5’s gold production guidance is between 90koz and 105koz of gold. Calidus Resources' Warrawoona mine has had a significant progress since first gold poured. During the September quarter reported 12.8koz recovered and 12.3koz sold.

Additionally, Pantoro Limited and its joint venture partner Tulla Resources, have announced that its flagship Norseman Gold project has pour first gold on the 13th October. The project’s first phase involves a centralised processing facility and a combination of open pit and underground mining, which expects to produce around 108koza of gold during an initial LOM of seven years.

Merges and Acquisitions

Canadian miner Kinross Gold sold its Russian assets to Highland Gold for US$340m in cash. The sale included two operating mines, Kupol and Dvoinnoye, and the exploration project Chulbatkan. In March, the company was forced to suspend its mining activities in the country—including the Udinsk development project and Kupol mine—because of international sanctions against Russia following its invasion of Ukraine.

Another significant move during the year was from Newmont – the world’s number one gold miner – by becoming sole owner of the Yanacocha gold mine in Peru. In February, Newmont acquired 43.65% interest of the mine from Minas Buenaventura in a transaction valued at US$300m. Later in April, the remaining 5% from Sumitomo Corporation for US$48m. Yanacocha is currently producing about 350koza of gold.

As its oxide resources are about to be depleted, the company started a Feasibility Study (FS) called "Yanacocha sulphides" designed to continue mining sulphide underground material. The FS plans to extend the mine life beyond 2040 by developing the Yanacocha Verde and Chaquicocha deposits and, consequently, the second and third phases of the FS would potentially extend the mine life for "multiple decades".

SSR Mining has acquired of all issued and outstanding shares of Taiga Gold for about C$30m(US$23.8m). The transaction adds five new properties to SSR, covering over 29kha to complement their exploration of the Saskatchewan Province. SSR Mining's Saskatchewan assets now cover an area of approximately 131kha.

On May, Gold Fields announced the transaction of the Canadian gold miner Yamana Gold. The deal would have created the fourth-largest gold mining company in the world. Last month, Gold Fields ended its pursuit after Yamana received a new joint-offer from Pan American and Agnico Eagle. The company refused to increase its bid. Yamana owns a portfolio of five producing precious metals mines located across Canada, Brazil, Chile and Argentina that generated 884.8koz of gold in 2021.

AngloGold Ashanti has announced the definitive agreement with Coeur Mining to acquire Coeur’s wholly owned subsidiary, Coeur Sterling. The company owns the C-Horst, SNA, Secret Pass and Daisy ore bodies, as well as the decommissioned Sterling Mine and all tenements that surround these properties in Nevada. 

The Crown and Sterling holdings comprise approximately 35,500 net acres and are located adjacent to AngloGold's existing gold projects in Beatty County – Silicon and Merlin. The company has published a 2021 Mineral Resource for Silicon of 3.37Moz of gold.