Gold price dips: New Zealand Mint comments

Media alert                                                                                                                                     

July 21, 2010

Gold price dips: New Zealand Mint comments

By New Zealand Mint head bullion dealer Mike O’Kane.

Spot gold, which sank to $1,175.5 this week, its cheapest since May 25, is currently trading at $1,190 per ounce. Currently it is targeting key support at $1,175 and $1,169, while resistance is set at seven-day moving average of $1,198 and $1,213.

This week also saw the gold price drop on low trading volumes and quiet confidence in risk based assets.

The short term implications for New Zealand are a decrease in the gold price locally, as the kiwi dollar has risen against the US dollar. This adds the double benefit of a decrease in metal price and the increase in exchange rate to make this an auspicious time for buying gold in NZ dollars. We have already seen increased buys on our local market as investors take advantage of the price dip.

Demand for physical gold has also increased with the drop in price, and has bolstered the US$ spot price from USD$1,180 on Tuesday trading to USD$1,190 overnight. The Indian market is also seen to be picking up with the gold price perceived to be high.

"At these levels there has been some good physical demand and activity from the Asian sector and this should lend some good support to the gold market," one Swiss trader said.

The expectation that the European Banking stress test later this week will be successful has also lent itself to some short term covering buys.
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