We have finally witnessed the long awaited movement in the Gold market with renewed global interest likely to continue unabated.
Speculation is once again rife that we will see price of gold hitting US$2000 per ounce by Christmas.
Across the Tasman, it has been reported that Gold has soared past coal as Australia’s second most valuable physical export to China, second only to iron ore.
Considering that China produces the most gold in the world followed in second place by Australia, it appears that China is significantly increasing its sovereign gold reserves.
Chinese buyers also appear to be hoarding the yellow metal, following the example of their Central Bank.
Add to this the fact that their economy is slowing, the Government has imposed property-buying restrictions and financial market uncertainty; it is not surprising they are buying.
So what does this mean for the price of gold?
Well, that is anyone’s guess, but with China’s gold reserves low relative to its peers and its move to build them up, plus a likely increase in consumption again in the fourth quarter (traditionally Chinese people buy gold jewellery for weddings and presents) the immediate future looks up for gold.
Elsewhere, India’s gold demand has increased for the first time in six quarters.
This can be attributed to the stronger Rupee and the onset of Diwali and Dhanteras festivals this month.
With the wedding season about to start, gold will no doubt continue to be an essential gift.
All this looks to add additional upward pressure to the physical gold price.
Domestically the high NZD continues to mitigate any advances in Gold. With the NZD hovering around 0.81 vs. the USD, purchasing Gold in NZD remains a relatively attractive proposition.
Hayden Syers is the Chief Operating Officer and Head of Bullion at the New Zealand Mint Limited, which is the Sponsor of the ‘Business Excellence in Restaurant Trade’ category of the Indian Newslink Indian Business Awards 2012.
