Geopolitical uncertainty has pushed gold prices to a record high but New Zealanders are not rushing to buy, local bullion merchants say.
Gold hit a record US$1440.10 an ounce on Wednesday, rallying 10 per cent since uprisings in the Arab world triggered a fresh wave of safe-haven buying.
NZ Mint head bullion trader Mike O'Kane said the New Zealand dollar gold price had also hit a record spot rate on Thursday of $1928 before easing back to $1920.
Normally the pullback would have flushed out some buyers hoping to see the gold price surge higher, but Mr O'Kane said buying had been quieter than usual, particularly out of the South Island.
"We're seeing offshore buyers who are buying for safe haven reasons, but locally it's more being eyed as an investment product at the moment."
However, business was still brisk, and a number of long-term gold investors were cashing in on the high price. Demand for silver was also "going through the roof".
Silver prices have risen dramatically over the last six months, from the low US$20s to a 31-year high of US$34.96 an ounce.
"It may be that there's a shift to the cheaper metal as [gold] gets more expensive, but they're both still turning over quite rapidly," Mr O'Kane said. "We're going through record numbers of silver fern coins."
In Wellington, Walker and Hall assistant manager Alwyn Knox said her company had not seen an increase either in selling or buying bullion over the last few months.
"A lot of people are selling gold jewellery for scrap," she said, "but not when you're talking bullion."
As for the future, Mr O'Kane said investors were awaiting a Reserve Bank decision next Thursday as to whether it would cut the official cash rate (OCR) and he expected this would force the local gold price up further.
Internationally, too, he expected gold's bull run had a way to go.
"Historically the oil price, being inflationary, has been a key indicator of where the gold price is likely to go and given that Brent crude is currently at US$115 a barrel, which is pretty massive, there's an expectation that the gold price will continue to climb in the short-term, at least."
Gold has climbed steadily in value since 2008's global financial crisis and the subsequent quantitative easing in the US. But more recently the price has come under pressure after investors became more confident about economic recovery and inflation being kept under control.
Simon Weeks, head of precious metals at the Bank of Nova Scotia, said he thought the gold price would take a breather at US$1450.
"Any good news from the Middle East will see a pullback to US$1400."
HSBC also said the financial and geopolitical backdrop had not deteriorated enough for gold to show off its safe-haven credentials.
Charlie Morris, head of absolute return at HSBC Global Asset Management said he thought the current gold trades were "extremely overcooked".
"It has outperformed bear markets but it is a risk-on trade and I think something needs to change before it becomes the 'flight-to-quality in a crisis' and I don't think we're at that point yet."
- BusinessDay with Reuters