Gold price surges: NZ Mint comments

Gold price surges: NZ Mint comments
By NZ Mint head bullion dealer Mike O’Kane.

The gold price has passed though USD$1200 an ounce as investors seek safe havens from the financial unrest in Europe and significant drops in the DJI and NASDAQ overnight (May 6/7).

The short term implications for New Zealand are an increase in the gold price locally, as the kiwi dollar has dropped against the US dollar, increasing the gain in our dollar terms of nearly $100 last night. This has already shown with increased buys and sells on our local market as investors take advantage of the double hit to take profit.

What we’re seeing on the wires at the moment is that the Dow Jones dropped by 400 points on overnight trading. Then due to what has been described as “fat finger technical issues” it dropped another 600 points in 25 minutes, before paring the overall loss to 450 points. ALERT: All trades processed on the NASDAQ between 2:40pm and 3pm showing a rise or fall of more than 60% from the previous trade have been cancelled.

Investors are being pushed away from the Euro by concerns over the debt positions of more Euro countries (Spain, Portugal and Italy are being looked at closely) and the reaction to the Greek austerity cuts.

They are looking for safe havens and lower risk investments such as the USD$, or gold. This has a twofold effect for the gold in NZD$, with the NZD/USD potentially dropping further on a strengthening USD$ and the gold price pushing to new highs.

Silver did not move particularly much overnight trading within a USD$0.40 range.

All of this leads to what can only be described as an exciting rollercoaster ride for gold, currencies and equities for the short term.

The $1,200 question is whether or not the price increase will continue or trigger a round of profit taking at the end of week trading tonight.

ENDS

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