There have been peaks and flat patches in global gold
trading in the past three months. Pictured: gold bars at a
gold house in Munich. Photo by Reuters.
Global gold prices have nose-dived almost $US100
($NZ116.40) an ounce in the past three weeks, after a
three-month surge to more than $US1380 in mid-March.
From mid-December's low of below $US1200 gold had steadily
risen to more than $US1380, but had in recent weeks fallen
and was trading around $US1300 on the New York exchange
NZ Mint's head of bullion, Clare Goldworthy, said gold demand
had been ''relatively bullish'' during the first three months
of 2014, ''with a few flat patches thrown in''.
Craigs Investment Partners broker Peter McIntyre said with
gold being a traditional hedge against inflation, and
inflation being benign, including in the United States,
Australia and New Zealand, investors could expect gold ''to
pull back further''.
''The yellow metal needs a code red to get going, like the
Ukraine [crisis], but global inflation is benign,'' he said.
He described the present price at $US1280-$US1300 as
''weak'', and while volatility was expected during the year,
gold could fall to $US1200 during the year, and if it went
below $US1200, ''then $US1000 could be in sight again'', he
Ms Goldworthy said in 2013 consumers generated exceptional
levels of demand for gold, and while no single event was
likely to affect the price, the Crimean crisis and threat of
war did contribute to buying pressure, which eased towards
the end of March, ''with prices coming back significantly''.
''With world unrest seemingly on the increase across several
different levels, investors from all walks of life appear to
be showing growing interest in precious metals, the argument
being that gold and silver help preserve wealth in turbulent
times,'' Ms Goldworthy said.
As a reaction to lower gold prices, some producers had
suspended marginal mines, while others were actually
increasing production to maintain revenue levels, he said,
citing Reuters reports.
''There are suggestions higher-grade ore is being targeted,
called high-grading, by some to keep marginal mines
operational, perhaps at the expense of future production,''
In the face of rising production costs, Oceana Gold had
restructured its New Zealand operations, cutting back its
operational plans, laying off staff and signalling the
possible mothballing next year of its Reefton mine , which
employs about 260 people.
Ms Goldworthy said worldwide gold output would set a record
this year and the slide in prices was unlikely to put a brake
on the tonnage mined until 2015.