Barrick Gold Corp. (ABX), the world’s largest producer of the metal, said gold prices may retest previous highs and rise toward $2,000 an ounce within two or three years.
The metal has probably reached its lows and could exceed $1,500 an ounce in the next year, Barrick Chief Executive Officer Jamie Sokalsky said in an interview in Toronto today. Gold fell 28 percent last year, the biggest annual decline since 1981. It has recovered some ground in 2014, rising 11 percent in New York trading.
“Ultimately we are going to see gold go back up and I think we could challenge the highs that we saw a couple of years ago,” Sokalsky said at a Bloomberg event. “Within two or three years, I wouldn’t be surprised to see gold back up towards $2,000.”
Gold slumped into a bear market in April as some investors lost faith in the metal as a store of value amid an equity rally and muted inflation. Exchange-traded funds, or ETFs, that track gold lost $73.4 billion in value last year.
“What we saw was perhaps an overshoot on the downside as we saw liquidation from the ETFs,” Sokalsky said.
Since then, the negative sentiment surrounding the metal has “seemingly dissipated,” he said. “We’ve actually seen some buying in the ETFs.”
Gold for immediate delivery fell 1.2 percent to $1.334.47 an ounce in London today.
Analysts are split on the outlook for prices. Goldman Sachs Group Inc. last month reiterated its forecast for the metal to reach $1,050 by the end of the year. Westpac Banking Corp. sees bullion dropping to $1,011 in December. UBS AG said Feb. 19 that the commodity has “started to shed its stigma” and increased its 2014 forecast to $1,300 from $1,200.
Barrick isn’t considering a return to gold hedging, Sokalsky said. In December, John Thornton, who was named to succeed Chairman Peter Munk, said that hedging output makes sense and is worth considering.
Thornton’s comments focused on the idea that hedging “is a discussion that anyone should have in the commodities business,” Sokalsky said today. “Gold is not something we’re considering hedging.”