Falling production has led to rising Gold prices

Supply and demand fundamentals will continue to drive gold prices higher, it has been claimed.

Thanks to a decline in gold output at mines across the world, production is unable to keep up with demand for the precious metal, which could lead to an increase in prices, reports Reuters.

A power crisis in South Africa has recently disrupted production and yields are decreasing, leading to miners having to conduct deeper, more costly excavations, according to the Herald.

Evy Hambro, managing director at BlackRock Merrill Lynch Investment Managers, told a press conference of his optimism for investment in gold.

It takes two, three or four years to build a mine, so you can't just turn a tap and produce more commodities. I would say the gold prices are going to continue to be in a positive direction. Supply side constraints will also continue to support the price of gold and other commodities, he said.

Total gold output in Zimbabwe fell 58.9 per cent in February compared to the same month last year and was 14.8 per cent down on January's total, according to official figures reported by the Herald.

By Arrangement with www.bullionvault.com