Gold Below $1,100 Threatens Profit at One-Third of Producers

24-Jul (Bloomberg) — With gold trading below $1,100 an ounce, profit at one-third of the producers of the precious metal is under threat, according to Bloomberg Intelligence.

Among 18 gold companies that reported so-called all-in sustaining cash costs in the first quarter, six had costs above $1,100, according to a Bloomberg Intelligence note on Friday.

That means the companies are under tremendous pressure to cut costs or shut unprofitable operations, said Kenneth Hoffman, the BI analyst who wrote the note. The big question is, how quickly will they respond.

“I think these guys are scrambling right now,” Hoffman said by phone on Friday. “This has been a really fast decline. I don’t think anybody really saw this coming,”

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PG View: The scaling back of production would likely further tighten supply, underpinning prices.