Update 29 June

Gold

Gold is back around USD$1,238 (bid) / USD$1,244 (ask) after breaching USD$1,262 on Monday (in the early hours of Tuesday NZT). A large drop of more than twenty dollars after reaching the USD$1,262 in a few hours was due to profit-taking.

Reuters reports: "Gold is likely to remain pretty well supported in the current quarter. Safe-haven demand for gold remains prominent," said David Moore, a commodity strategist at Commonwealth Bank of Australia in Sydney, adding that Monday's decline did not represent a fundamental change in gold views.

CBA Commodities reports "We expect that safe-haven demand will support the gold price at around current or higher levels in the coming quarter. But that the gold price may fall back over the course of 2011 as improvement in the international economic environment reduces safe-haven demand."

However, thebulliondesk.com cautions "Last week's reports on the US economy suggested its recovery may stutter and traders have turned cautious in case the trend is confirmed this week."

Currency

Reuters reported that the NZD/USD opened around 0.7088 and traded a narrow 0.7067/0.7106 range for the entire NY day Kiwi tracked Aussie for most of the day slipping briefly at the NYSE open then recovering toward the London close.

NZD Gold

With currency trading fairly tightly, the NZD price has been tracking the USD price and currently gold is sitting close to our report last Friday at NZD$1740 (bid) / NZD$1778 (ask).

Economies

Take a look at this interesting and amusing video from over the ditch

Gold eases back from Monday's high

Gold


The gold price dropped from Monday's highs due to profit taking and fell to around USD$1,232 before recovering to $1,242 (bid) / $1,247 (ask) on Friday morning (NZT).

All in all it has been an eventful week with reached on Monday. Typically June and July are slow months due to summer holidays in the northern hemisphere, but weak US data and a continuation of Eurozone debt issues has lead to more activity.


The Bullion Desk said in today's update "Gold prices strongly rebounded during afternoon trade on Thursday, as record high Greek credit-default swaps triggered safe-haven demand, while buying also emerged for exchange-traded funds based in Switzerland, traders said."


The Inflation Debate

"The gold market was partially supported off the Fed's widely expected promise to leave US interest rates low for an extended period of time. However, gold was also somewhat undermined by suggestions that the Fed was a little more guarded on the track of the US economy," said Nell Sloane at NS Futures. "In the near term, the gold trade will probably continue to focus on the debate over the direction of the global economy and the prospect of deflation or inflation," Sloane said, adding that resistance stood at $1,259.20 and support at $1,214.90 per ounce.

There are countless discussions going on about inflation, hyperinflation, deflation and stagflation but we found this interesting article about hyperinflation that we thought you might like.

Currency

Yesterday the NZD/USD reached a 6 week high of 0.7161 and is currently sitting around 0.7020 (ask) and 0.7125 (bid). This small decline is due to a combination of risk aversion and profit taking.

NZD Gold


Currently gold is sitting around NZD$1,740 (bid) and NZD$1,777 (ask).

Good Article - Gold and Government Bonds

Economist - Why are both Treasury bonds and gold performing so well?

Gold hits fresh highs in USD, unchanged in NZD

Gold
Gold has been on upward trajectory since last week and Friday's close of the New York market saw prices up at USD$1,256.60 after hitting a high of USD1,262.70 earlier in the session. After some turbulence this morning (New Zealand time) the USD spot price seems to be holding steady around $1,257 (bid) and $1,262 (ask).

Sitting steadily above $1,250, gold looks set to challenge $1,280 and $1,300. In fact, Standard Chartered Bank expects gold to average $1,300 in Q3 of this year and $1,400 in Q4.


So why the climb?

There are several reasons why gold keeps climbing. Recent data out of the US has been poor, including jobless claims. Combine this with the enduring rumours that Spain will be the next to ask for a bailout, concerns about spread of debt in the eurozone and signs of inflation in emerging markets.

But the major influence has been the announcement that the EU will stress test its largest banks.

"Some of the rationale to take gold prices higher was provided by news that the EU planned to stress-test 25 of its largest banks under a scenario of slowing economic growth and elevated stress in sovereign debt holdings," said analyst James Steel at HSBC.

If any of Europe’s major banks do not pass the stress test, the ensuing flight to safety could push gold prices even higher, while physical demand remains strong, Steel said.

Currency

The New Zealand dollar has crept still higher over the weekend, currently sitting around 0.7067 (bid) and 0.7175 (ask).

The big story in currency over the coming weeks will be China's decision to allow the yuan more flexibility. While a number of governments internationally, including the US have been asking for this for some time, in the short term, the result may not be as anticipated. If the Euro continues to fall against the USD, the yuan could actually depreciate. See the full story here China forex move could thwart U.S. hopes

NZD Gold

Again NZD gold is relatively static, with spot prices at NZD$1,755 (bid) and NZD$1,787 (ask), with the NZDUSD exchange rates offsetting another strongincrease in USD gold. This stabilises the price in NZD over the past week, due to currency strengthening along with gold prices.

No change in local gold price, despite USD$10 rise

Gold

Gold surged to multi-week highs during Thursday night trading, as poor US data and continued economic uncertainty sparked safe-haven buying, sparking gold to a run towards fresh record highs. Currently sitting fairly steadily around USD$1248, the price briefly edged up to USD$1251.30 at one stage. This isn't far off the high of $1252.30 we saw on June 8th.

"We are getting close to month- and quarter-end, so I would think if not this Friday then next Friday we will see some real action," a Swiss trader said. As well, lingering doubts over the health of the eurozone, combined with end-of-week book-squaring, could add to upside pressure.

The concerns in the market are still Greece and US jobless figures. Most recently t

he US Labor Department reported weekly jobless claims rose 12,000 to 472,000 when a drop of 8,000 to 452,000 had been expected, and the Philly Fed’s index showed manufacturing growth slowed down considerably in June.
The data put a halt to a rally on Wall Street, weakened the dollar and led to a run on gold.

Currency
With a softening of the USD against the kiwi on the back of jobless claims, the NZD is sitting around .7086, which is a .5c improvement on Wednesday's figure.

NZD Gold
Gold in NZD is currently sitting around NZD$1785, which is little change from Wednesday's price, despite a jump in USD gold. An improvement in the NZD has meant that despite a USD$25 improvement in gold prices, NZD gold is actually NZD$10 less than a week ago.

Complete our survey and go in the draw to win an NZD$800 prize

We have been making a few changes to the way we communicate of late. As part of these changes we are also reviewing our current website, email and social media use.

We would love to hear your feedback on the type of information you would like to see, so please fill out our survey http://www.surveymonkey.com/s/bullion. We are offering matching His and Hers coin watches, valued at over NZD$800 RRP, to one lucky winner who fills out the survey.

If you have any other questions or suggestions to help us improve the way we communicate with you, please feel free to email them through to nicola.hoogenboom@nzmint.com

Thanks and happy surveying!!!

This competition is now closed. You can view our new website at www.nzmint.com!

Gold lifts as investors move out of euro

Gold
The gold price has strengthened to USD$1237 as investors move out of euros after learning Moody's downgraded several Greek banks after cutting the government's credit rating to junk.

Gold still remains relatively range bound between USD$1220 and USD$1240. The next resistance level USD$1250 was broken through on June 8th, but without strong backing this looks to be a way off from reoccurring.

Currency
Light trading of the NZD overnight saw it pick back up to just below the 0.70 mark again to 0.6933, which feels like a long way off from the lows of the last few weeks.

NZD Gold

In spite of a rise in the gold price since Monday, a stronger NZD is again making gold cheaper to buy locally at NZD$1785.

Interesting Developments

• MIT in the US has found that using gold and platinum nanoparticles could make the lithium-air batteries used in electric vehicles significantly more effective. Commodity Online Story
• The number of bank closures in the USA has increased significantly in the past 3 years, see this Nifty Flash Map
• The fed reserve has sold 1.15bn in a Term Deposit Auction Bloomberg Story

NZ dollar up above 0.69

Gold
Gold closed higher over the weekend, and has again pushed higher on Asian trading this morning. Closing at USD$1225 on Friday it has pushed through to USD$1235 on short covering and continued aversion to risk.

Traditionally gold is quieter in June and July during the summer holiday period in the US. Combine this with the DuanWu holiday (also known as the Dragonboat Festival) throughout China and SE Asia and we may see weak movement in the gold prices until Thursday when Asian countries comes back from holiday.

Currency
The NZD increased against the USD at the end of the week, increasing from around 0.65 back up to 0.69, partially due to the increase in the OCR rate, and more confidence in the riskier markets - making the NZD$ more attractive to FX investors again.

NZD Gold

Despite a USD$15 rise in the gold price since Friday's update, NZD gold is only up $4 to $1800 on a stronger kiwi dollar.

Interesting articles

Should you buy or rent?

New Zealand dollar puts a shine on local gold prices

Gold

Gold is down to US$1220 as investor become more optimistic regarding economic growth.

"With a favourable Spanish auction result overnight, a much stronger than expected Chinese export tally and an upward bias in many global equity markets, it would seem like the flight to quality angle in gold is still being tamped down," said broker Nell Sloane at NS Futures.

Following yesterday’s positive comments by [US Federal Reserve chairman Ben] Bernanke on the US economy, profit-taking in gold continues apace," analyst Walter de Wet of Standard Bank said. "Scrap selling has re-emerged with gold above $1,230, which has capped rallies."

"However, we maintain that dips should be bought," he added. "China’s foreign reserve holdings and, by implication, global liquidity are set to increase further, confirming that the longer-term upward trend in gold remains in place."

Gold logged an all-time high of $1,254.50 per ounce on Tuesday as fears the eurozone debt crisis could spread to the UK caused investors to look for a safe haven.

Currency

Yesterday the RBNZ increased the OCR by 25 basis points, to 2.75%, a move that was widely expected. There is an expectation that rate increases will continue to rise, provided that the sovereign debt crisis does not effect local funding costs.

The result of the OCR increase has been a rally of the New Zealand dollar, which was up against major currencies this morning and currently sits around 0.684 against the US dollar.

NZD Gold

Due to favourable exchange rates, the NZD gold price is down almost NZD$90 on Wednesdays price to NZD$1796, despite a much smaller fall in the USD spot price. This is good news locally, as gold becomes better value in local currency, providing good opportunities to buy.

Update 9 June 2010

Gold


Spot gold rose to a lifetime peak of $1,252.30 per ounce overnight  as poor European economic releases compounded already fragile investor mood before settling back despite another brief run-up to $1,245.20/1,246, still up $5.30 from the previous session.


Last time we provided an update the gold price was at USD$1208, so why the big change? Firstly, there was a large upward swing late Friday (Saturday New Zealand time) due to poor jobs figures in the US, which sent the dow tumbling and gold right up. Secondly, the European debt crisis seems to be getting worse, not better, with Hungary joining the list of possible defaults.


Analyst Walter de Wet of Standard Bank commented "While we could see some profit-taking, especially in the physical market as gold targets new highs, we do not expect a steep decline in the gold price as we did in May," he added. "Globally risk remains high, and gold and the dollar are reaping the benefits."

Gold also set new lifetime highs across a multitude of currencies as risk aversion surged, including Canadian dollars, the yuan, Swiss francs, sterling and the euro, while also setting multi-month peaks in Australian dollars and rupees.

Currency

The New Zealand dollar has dropped from last week's 0.68 and has been trading at around 0.66 for much of this week. Tomorrow all eyes will be on the Reserve Bank as the decision on whether or not the raise the OCR is made.

NZD Gold

Spot gold in is up around NZD$1885, which is a $120 increase on the price given in last Friday's update. This is however is still a way off the NZD$1950 we saw in February of last year when the dollar was around USD$0.50 

Update 4 June 2010

Gold has fallen back today, with the spot price falling to USD$1208 on confidence a US economic recovery is taking hold, which convinced tired long holders to take profits.


In New Zealand currency the dollar has risen to 0.684.


$NZD Gold: The rise in currency and drop in USD gold has resulted in a drop in the local gold price to NZD$1765.

Update 2 June 2010

Gold has rallied over the past 7 days, with USD spot gold now at $1225. This is largely due to continuing Sovereign debt concerns in Europe, as well China's concerns surrounding the that currencies it is being paid in are risky.

In currencies the NZD has weakened against the USD on light volume, as markets took in concerns about USD funding in Europe, trouble in the Middle East, and an ECB report saying that European banks may have EUR€195 billion in write downs.

This has resulted in an increase in the local gold price rising to NZD$1816.

Looking forward, analysts are predicting increases, especially due to concerns over sovereign debt.

"Gold remains well supported above $1,200 [and] dips are buying opportunities," analyst Walter de Wet of Standard Bank said. "We believe that gold will touch record highs in dollar terms soon and also see it trading above $1,300 in [the third or fourth quarter]."

The interesting thing has been that gold has not been following traditional trends.

Walter de Wet goes on to say "Financial strain in the eurozone has pushed the euro to successive multi-year lows against the US dollar, sending it as low as 1.2110 on Tuesday. This has not, however, weighed on gold’s movements, with the metal mostly detaching from its historical inverse relationship with dollar/euro fluctuations."

"Since the Greek sovereign debt crisis, we have had a breakaway from the short-term correlation between the dollar and gold," Citi said. "That is because the Greek/European crisis enhances global systemic risk to the financial system (a positive long-term driver for gold)."