Market review

Market review

During 2019, uncertainty around global economic prospects, declining interest rates and rising geopolitical tensions sparked an investment demand for precious metals. These factors largely determined the performance of gold, silver and PGMs, all of which demonstrated significant growth.

Precious Metal Prices

Gold price,

Silver price,


Key facts

+ 19%

year-on-year peak price in 2019 ($1,523/oz)


year-on-year increase of the average price for the year ($1,393/oz)

A rally started from early June and by September as the Federal Reserve shifted to cutting rates for the first time since the financial crisis, while US/China trade tensions and Brexit concerns increased. In the beginning of Q4, gold lost some of its previous gains, but in December, gold rebounded by 4%, finishing the month at $1,523/oz as investors repositioned ahead of 2020.


Annual gold demand was boosted by a significant rise in investment flows into ETFs and similar products used as ‘safe haven’ assets. Gold-backed ETFs saw an inflow of 401 tonnes (9% of the total gold demand) compared to 76 tonnes in 2018. ETF holdings totaled 2,886 tonnes by the year-end.

Gold demand by category in 2018 (in the centre) and 2019

On the contrary, investment in gold bars and coins dropped 20% year-on-year to 871 tonnes. Most of the decline came from a sharp downturn in the two largest markets: China and India.

Central banks were net buyers for the tenth consecutive year. The three largest purchases:

  • Turkey (+159 tonnes)
  • Russia (+158 tonnes)
  • Poland (+100 tonnes)

Overall, total central bank demand comprised 650 tonnes, the second highest level of annual purchases for 50 years after 2018.

Full-year gold demand in the technology sector fell by 2% year-on-year to 327 tonnes as 2019 was a weaker year for the whole electronics industry.

Jewellery demand declined by 6% to 2,107 tonnes affected by the steep rise in the gold price in the second half of the year, which decreased affordability.

The total annual gold demand increased by 1% year-on-year to 4,356 tonnes.


Global gold supply in 2019 was up 2% year-on-year to 4,776 tonnes.

A 1% decline in mine production was offset by an 11% growth in recycled gold supply which totaled 1,304 tonnes spurred by price dynamics.


During 2019, silver mostly tracked gold price dynamics driven by similar factors including global economic and political concerns, as investors perceived silver as another ‘safe haven’ investment. As a result, the silver price jumped by 17% year-on-year to $18.0/oz with the peak level of $19.3/oz also reached in September.


Silver industrial fabrication was at a record high. However, several areas of silver electrical and electronic end-uses struggled against a backdrop of the escalating US-China trade war, although the negative impact was mitigated by higher silver usage in other categories, especially in the automotive sector. Global silver jewellery and silverware demand also recorded increases, led by India. Lastly, ETFs and physical investment both increased year-on-year, with the latter helping to drive the silver price.

Platinum group metals

Platinum surged by 22% year-on-year in 2019 to $971/oz, spurred by a considerable increase in investment demand pushing the market into a deficit, though physical consumption continued to face challenges. Industrial demand was weak due to a reduction in the sale of diesel cars and an overall decline in automotive sales. Jewelry continued its downward trend on the back of higher prices.

Palladium posted another spectacular year with performance soaring by 52% year-on-year to $1,920/oz, the premium over platinum nearly reaching 100%. The jump was due to a large deficit in the palladium market throughout the year, strengthened by expectations of this situation persisting on the back of exhausted available inventories and despite slowing global petrol auto sales.

Mine production around the world


In 2019, global gold mine production totalled 3,464 tonnes, 1% lower than in 2018. Output from China, the world’s largest gold producer, declined for the third consecutive year, falling 6% year-on-year as a result of tougher environmental regulations. However, the biggest negative contribution came from Indonesia where the largest gold mine, Grasberg, experienced a depletion of higher-grade ore. Laggards also included South American and South African countries where social conflicts at several mines resulted in limited production.

This decline was almost fully compensated by the growth of gold production in Russia (+8% year-on-year), Australia (+3%), Turkey (+66%) and several West African nations.


Silver production was also marginally down impacted by disruptions and strikes across South America.

Our operating environment


Hard rock mining is the second largest industry in Russia after oil and gas. Despite the country’s vast resource potential in precious metals, it remains largely underexplored with a lack of investment in the sector, due mainly to tight and complex exploration regulations as well as the limited availability of foreign investment.

In 2019, the oil market rebounded after its sharp decline in Q4 2018. Higher oil prices, the improving Russian economy, increased inflow of foreign investments into Rouble assets and lower inflation expectations provided support for the national currency. In 2019, the Russian Rouble/US Dollar average exchange rate weakened by 3% year-on-year. This had a moderate positive impact on the mining sector, resulting in a lower Dollar value for Rouble denominated operating costs and higher margins. Russia remains among the lowest-cost major gold producing countries. The country’s gold production was up 8% to approximately 320 tonnes.


Although Kazakhstan has a significantly smaller share in global gold mine production, it has a strong growth profile, attributable to a good climate for foreign investment in the sector and supportive government incentives. In 2019, Kazakhstan increased its refined gold production by 5% year-on-year to approximately 58 tonnes. The Tenge was relatively stable during the year, staying close to the levels it had reached after significant depreciation in the second half of 2018. The average rate weakened by 11% making a positive impact on the Kazakh gold mining economy.

How we respond to these trends

We are utilising our experience in mine performance optimisation and the pursuit of high-grade and highoptionality assets in order to ensure sustainable economics against the backdrop of volatility in commodity prices and foreign exchange rates.

Our strong performance in 2019, due in part to the successful rampup of our Kyzyl flagship operation, with cash costs of $399/oz, record production of 1,614 Koz of GE and solid financials, re-affirms the success of our approach and our ability to deliver on our long-term strategy. In order to limit our exposure to risk, in the process of project approval, we continue to stress test all projects with a 20% discount to spot prices and a 10% increase in operating costs, ensuring that our operations can be sustained even under volatile market conditions. Similarly, we continue to review the prices used for our reserve-and-resource statement on a regular basis to reflect market fluctuations.

Find out more about our risk mitigation in Annual Report (Strategic report — Risks and risk management)

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