Despite impressive gains in recent years, the vagaries of international gold marketsare expected to take Guyana’s commodity fortunes through the peaks and troughs of continued volatility in coming months.
Last October’s price highs of close to US$1,800 an ounce fell close to 35% in June this year to reach just over US$1,200 on the London Gold Fix.
Recent downward global price trends have been attributed to the impact of gold sales by Cyprus in the midst of its recovery efforts in the earlier part of the year and generally depressed international demand.
Analysts have also pointed to gradual U.S. economic recovery, a slowdown in economic growth in China and state interventions in India to restrict gold imports.
In Guyana, international price volatility is mixed with a variety of domestic challenges. The Guyana Gold and Diamond Miners Association has, for instance, pointed to poor road infrastructure, steep equipment costs and the high price of fuel to service operations deep in the hinterland. There have also been environmental concerns regarding some mining practices.
There are fears that continued depressed price conditions will have a spillover impact on productivity in the mines and ensuing negative implications for the domestic economy. Gold and diamond mining contributes up to 53% of the country’s foreign exchange earnings and, together with sugar, bauxite, shrimp, timber, and rice, contribute more than 60% of the country’s GDP.
The gold yield in Guyana has actually grown in recent years, reaching 300,000 ounces in 2012 following increases over a three-year period. The outlook however is for continued low demand and prices over the short to medium term.