Gold fell to its lowest level since 2010 on Friday to under $1,200, which is what it costs many miners to produce an ounce of gold, and analysts tell CNBC that miners will be "severely" impacted if prices stay here.
Andrew Su, CEO at brokerage Compass Global Markets said the average cost of producing gold in Australia, home to some of the world's biggest gold miners, has jumped from $500 an ounce in 2007 to over $1,000 an ounce this year.
"What I believe is that the official costs, the costs in reality, are significantly higher than $1,000. So we've had quite a few gold mines close in Australia," Su said on Friday. "We've had some companies actually go bust and we've also got significant job cuts by big miners like Newcrest, Barrick, and Silver Lake Resources."
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Su adds that fixed costs like paying workers are actually rising quite significantly while gold prices have fallen, adding more pressure to miners' operations.
According to industry experts, the total cost of production varies between $1,000 and $1,200 an ounce depending on the scale of a miner's operations.