Signs of a concerted action by European officials to resolve the region's debt problems have helped to halt the fall in gold prices but the value of the metal has taken a hammering in the past month, slumping by nearly 10 per cent this week.
Goldmining stocks have been hit,with NZX-listed OceanaGold slumping to $2.65 on Monday, its lowest close in a month. At the weekend gold futures suffered their biggest three-day slump since 1983. Although gold is seen as a safe haven in turbulent times, analysts say it has been hit by a combination of factors to drive it off near historic highs at the start of the month.
Gold contracts were trading for US$1859.50 an ounce earlier this month but yesterday were at US$1630.50.
Peter McIntyre, from Craigs Investment Partners, said the gold price fall had been looming
"We've always said around the US$2000 mark it was getting into bubble territory so there's been a bit of profit taking."
Besides traders selling to make up for losses on stocks, European governments which were big holders of gold were also believed to be selling.
McIntyre said those mining copper and rare earths had seen their share prices under pressure as doubts about global growth collapsed.
Head of bullion dealing for New Zealand Mint Mike O'Kane said sharp falls were also attributable to a new charging regime on Chicago's Comex exchange making it more expensive for speculators to trade. Cash deposit for gold futures rose 21 per cent to US$11,475 per 100-ounce this week. The falling price had rekindled interest from potential buyers.
