Kiwis buy bargain price gold
Kiwis are snapping up gold after the price of the precious metal sank to one of its lowest levels in three years last week.
Spot gold prices dropped by US$30 to US$1224.90 an ounce on Thursday night on jitters that the United States Federal Reserve would finally end quantitative easing.
That sent the phones ringing at one of the country's biggest gold bullion merchants, NZ Mint.
Chief executive Simon Harding said gold was seen as a hedge against inflation so the prospect of rising interest rates meant the precious metal lost some of its allure.
There had been strong activity from both buyers and sellers, with investors divided about the US economy.
"It's really a dichotomous view of the market. For every person who thinks no, the Fed's going to ease tapering and gold's going to lose its shine, there's somebody else who thinks, this is a bargain, I'm going to climb in now."
At another major merchant, New Zealand Gold Hunters, it was all about the buyers.
Trader John Hunter said that had been a trend since April, when the gold price dropped US$200 to US$1611 overnight, the biggest slump in 30 years.
Demand was strong. "We are seeing a large number of significant purchases of gold - over $100,000."
It was a far cry from when gold peaked at US$1900 in 2011 and Hunter blamed investors on the gold futures market for dumping their stock.
"When they discovered they couldn't make the money they thought they could, they just kept on dumping it.
"I see this price continuing through till February, maybe March. The reasons for the price of gold climbing to its highs in 2011 haven't changed. The American dollar is still in deep trouble."
The gold price was still volatile on Friday but the New Zealand dollar was strong which meant Kiwis were getting more for their money, Hunter said.
On Sunday the price of gold had bounced back to US$1236.50.
- © Fairfax NZ News
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