Will gold price sustain new record high?

Gold prices have reached a new all-time high, breaching the $2,800 per ounce barrier this week. Investors are seeking a safe haven amidst geopolitical tensions and the uncertainties surrounding the US elections. The Nigerian Extractive Industries Transparency Initiative (NEITI) has reported that the extractive and mining sector has contributed a significant 1.1 trillion naira to the Federation Account over the past five years. Nere Emiko, Vice Chairman of Kian Smith Refinery, joined CNBC Africa to discuss these developments. Emiko expressed agreement with analysts who believe that gold remains in a strong uptrend, with multiple positive factors driving its upward trajectory. He confidently stated that 'the winner of the US election is gold,' emphasizing the metal's impressive gains across various timeframes. Gold has seen substantial increases, with a 3% rise in 30 days, a 19% increase in six months, and a remarkable 81% surge in five years, signaling a bullish trend that shows no signs of slowing down. The recent US non-farm payrolls data for October, which fell short of expectations, coupled with inflation figures, is anticipated to lead to a Federal Reserve interest rate cut. Historically, lower interest rates are favorable for gold prices, and analysts predict a three percent gain by the end of the year. Financial institutions like Citi predict gold to reach $3,000 within the next six months, while others like Goldman Sachs and JP Morgan forecast a target of $2,900 by January. While gold takes the spotlight, silver has also benefited from the precious metal's rally. Emiko noted that silver's price suppression and industrial usage pose challenges to its price movement, making a significant jump unlikely this year. As the focus remains on gold's performance, Emiko highlighted the need for increased transparency and production in Nigeria's mining sector. NEITI's report on the sector's contribution to the government's revenue reflects progress in transparency, with minimal discrepancies in financial reporting. Emiko credited the quarrying industry, particularly in states like Ogun, Kogi, and Rivers, for the sector's revenue growth. Despite concerns of smuggling highlighted by the mining minister, Emiko emphasized that Nigeria's gold production and potential smuggling rates are relatively low in comparison to other African countries. In terms of policy recommendations, Emiko suggested streamlining export processes and reducing bottlenecks to discourage smuggling and promote legal mining activities. While acknowledging the government's efforts in policy formulation, he emphasized the importance of creating a conducive environment for the sector's growth by addressing operational challenges. As gold's upward trajectory continues, supported by economic factors and geopolitical uncertainties, market analysts remain optimistic about the metal's future performance. With gold prices surging to record highs, the precious metal remains a favored asset for investors seeking stability in volatile market conditions.