Gold has been up and down over the past couple of weeks. It’s currently sitting at around US$945 an ounce.
After dropping at the beginning of the month, we've seen gold pick up in the last couple of days. Yesterday gold picked up 2% after falls in the US dollar and further evidence of the weak US market saw investors head toward gold as a safe investment.
Mark O'Byrne, executive director at Gold and Silver Investments Ltd said, "With oil and commodities surging, the dollar continuing to weaken and economic growth slowing, gold's best friend stagflation is a real and growing threat to much of the global economy."
In the story, O'Byrne says that gold should test $950 "as investors realize that inflation is not some short-term phenomenon, but rather a medium and possibly long-term problem yet to be priced into the market."
He is probably right. It's widely known that gold is a hedge against inflation, and with this story pointing out inflation hitting 3.4% in NZ, we're seeing a number of investors putting some of their portfolio in gold.
On a related note - check out this graph (from here). It shows how even though the price of oil has climbed against the dollar and the euro - the price of oil in gold has stayed the same. Shows how closely commodity prices are linked.
