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July 2015

IBISWorld Business Environment Report

World price of gold

World price of gold

July 2015
Estimated Value in 2015: $1,208 per troy ounce
2010-2015 Compound Growth: -0.3%
Forecasted Value for 2020: $1,358 per troy ounce
2015-2020 Compound Growth: 2.4%
The world price of gold is represented by the average opening cost of one troy ounce of pure gold on the
London Bullion Market. Annual figures are equally-weighted averages of monthly averages. Data is
sourced from the London Bullion Market Association.
Current Performance
Gold has been scarce over the past decade due to the ramifications of the gold standard abolition. The gold
standard was finally abolished by the last of world currencies in the 1970s, and as a result, central banks
began selling off the reserves they no longer needed to keep. By the late-1990s, the central banks slowed
their sales as they had reduced their gold reserves to more acceptable levels. Demand for gold continued
growing, but a major supplier, large banks, stopped selling gold, leaving gold mines as the only supplier.
However, the two decades of excess gold supply had induced low investment in gold mining and
refinement. This caused steep increases in the price of gold because a several year gap exists between
investment in a gold mine and a resultant increase in production. In addition, world deposits have run low;
meaning the gold that is left in the earth is difficult and expensive to mine. These conditions combined to
cause the steep increase in price between 2001 ($271.10 per troy ounce) and 2007 ($696.85 per troy
ounce).

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World price of gold

July 2015

The price rise was exacerbated by the global financial crisis and recession that began in 2008. Investment
in gold as a commodity increases dramatically during economic downturns, as it is seen as more resilient
and less risky than world currencies. On the other hand, during economic expansion, investment moves
away from gold toward the higher returns of riskier assets. Due to investors fleeing to the safety of gold due
to the economic uncertainty, the average gold price jumped 25.2% in 2008, 11.4% in 2009 and 26.1% in
2010. Continued insecurity among investors caused by public debt concerns in the European Union and
the United States, kept the price of gold rising in 2011 and 2012 at 28.1% and 6.3%, respectively, leading to
a yearly average of $1,669 per troy ounce in 2012. However, these trends slowed in 2013 as the global
economy slowly strengthened, the United States continued to experience positive job growth and Europe
enacted measures to reign in the debt crisis. The price of gold, in turn, fell 15.4% in 2013 and another
10.2% in 2014. Consequently, the world price of gold is anticipated to decrease at an annualized rate of
0.3% over the five years to 2015.
Outlook
IBISWorld forecasts the price of gold to increase in the five years up to 2020, albeit at a modest rate. Once
the world economy begins to stabilize and fully shake off the lingering effects of the recession, investors
will move away from gold toward assets with higher returns. As a result, growth will be relatively muted
during the next five years. In particular, as advanced economies shake off the recession, more investors will
invest in equities and bonds at the expense of gold. Nevertheless, over the long-term though, the scarcity of
gold deposits will again push the price up over the remainder of the forecast period, causing the price to
increase at an annualized rate of 2.4% over the five years to 2020.

World price of gold

2,000.00

$ per troy ounce

1,500.00

1,000.00

500.00

0.00
1980

1985

1990

1995

2000

2005

2010

2015

2020

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Year

$ per troy
ounce

1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000

607.88
460.02
375.91
424.51
360.46
317.39
367.67
446.79
437.12
381.66
383.70
362.26
343.72
359.81
384.06
384.16
387.72
331.14
294.22
279.05
279.28

World price of gold

World price of gold

% Change

Year

$ per troy
ounce

% Change

-24.32
-18.28
12.93
-15.09
-11.95
15.84
21.52
-2.16
-12.69
0.53
-5.59
-5.12
4.68
6.74
0.03
0.93
-14.59
-11.15
-5.16
0.08

2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021

271.10
310.20
363.68
409.33
444.91
604.71
696.85
872.54
972.14
1,225.46
1,569.58
1,668.50
1,410.80
1,266.34
1,207.91
1,253.23
1,312.77
1,330.78
1,348.99
1,358.43
1,367.94

-2.93
14.42
17.24
12.55
8.69
35.92
15.24
25.21
11.41
26.06
28.08
6.3
-15.45
-10.24
-4.61
3.75
4.75
1.37
1.37
0.7
0.7

July 2015

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World price of gold

July 2015

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