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
