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.
