Welcome to the New Zealand Mint blog. We’ll be posting weekly updates on gold prices and the factors influencing them.
This week:
Weekly overview: A positive outlook - good time to buy, good time to hold.
Current influences on the price:
The NZ dollar remains high against the US. While normally the NZ dollar drops when the US dollar drops, Australian and Japanese investors are investing in New Zealand, maintaining the high rate versus the US.
This is good news for New Zealanders looking to invest in gold as gold prices are quoted in US dollars.
US interest rates are being held at 5.25%, and this has removed some strength from the exchange rate, but investors are now reacting to Bank of England rate rise of 0.25% and Euro central bank indication that there will be a rate rise there in June. This will further act in favour of the NZ dollar.
It’s also important to note that the US trade deficit has increased again - $6.2Bn since February with major companies like Wal-Mart posting their worst sales month ever. This would anticipate a further weakening in the US dollar going forward.
Oil Inventories in the US - A large rise in US oil inventories has led to reduction in investments by funds wanting to mitigate risk in the US. This has removed some of the impetus behind the Gold price. It is still rising, but not as quickly as it was. The US$700 level is still to be broken.
Interesting upcoming news – A predicted bad hurricane season for the Gulf coast of the US will have an impact on the US oil reserves – meaning many will head to gold as a hedge.
Demand for gold from the Jewellery industry is currently subdued, but is expected to pick up again when the Jewellery season begins. This will increase the price as the Jewellery sector currently uses around 80% of the gold mined each year.
Also worth noting: The Bank of Spain sold 80 tonnes (2.6 Million ounces!) of Gold in March and April which, with the increased supply, is helping to keep the price subdued in the short term. Current expectation is for a very strong medium term.
South African Gold output dropped by 10% year on year for March.
The weekly Spot range - Monday through Friday: High $NZD909 Low NZD$899.
Thanks for reading. If you have any questions, please email me Michael (at) newzealandmint.com.
