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).

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.

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?

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 

Gold price info - week ending July 6

Gold spot price ranges
USD: 657 – 647.00
NZD: 827.00 – 844.00
NZDUSD: .7870- .7760

A steady week for gold. We are seeing a compressed price range, with the main emphasis being on expectation of growth rather than immediate rises.
A stronger US dollar has seen downward pressure on gold; this can be seen by the drop below $650 and recovery after the July 4th holiday period.

The NZD again is the major player in the local market, with no sign of the Reserve bank intervening despite the 78c mark being reached. We have calculated that if you took the exchange rate back 1year ( .6300 ) you would expect to see a 22% increase on today’s price. A great argument for hedging!

Newmont mines announced this morning that they had scrapped their entire 1.85million oz gold hedge position. This is expected to push prices up, but appears to be still being digested by the markets. Watch this space.
Once again oil is hitting the headlines, this time because of the issues in Nigeria, including a series of kidnappings of oil workers, which coupled with the gasoline stock issues in the US and the continuing problems in the gulf; we are starting to see the oil prices creep upwards, which in turn adds impetus to the upward gold price.

Again the over all consensus is a period of consolidation prior to more upward growth for the bullion market.
Reefton gold mine opening
Don’t throw away your cell phone – $340 million worth of gold in them.