Kiwi takes edge off gold rush

Global uncertainty has pushed gold above US$1600 ($1885) an ounce for the first time.
Investors and speculators are flocking to what is widely perceived as a safe haven as the US dollar and the euro seem shaky.
The metal's rise has been remorseless during the past year but in New Zealand potential buyers have been told that they need to beware of the strong kiwi dollar.
NZ Mint bullion trader Mike O'Kane said gold's advance had stimulated interest. "But given the fact that the kiwi is through 84c [against the US dollar] again we're not seeing much difference in the last six months.
"For the last six months we've been very much range-bound between $1800 and $1900. We're actually at a similar point to what we were in March 2009."
O'Kane said the drivers for gold were around currencies and this was expected to continue.
Investors yesterday bid gold up US$12.30 an ounce to settle at US$1602.40. That's a record for the market price for gold, but below its 1980 peak after adjusting for inflation. An ounce of gold at that time cost US$850, or about US$2400 in today's dollars.
While spot gold hit US$1607.01 during the day yesterday, overseas commentators say its appeal as a safe haven is likely to continue.
Hamilton Hindin Greene analyst James Smalley said gold was a much more attractive investment for Americans.
"There's no currency risk in the United States, if you earn in US dollars and invest in gold any movement up is a straight gain. For a New Zealand investor you have to reduce down by the currency as well."
The same currency considerations applied to this country's only listed gold producer, OceanaGold.
"Investors in OGC have to remember their costs are in New Zealand dollars but they're selling a product in US [dollars]. Investors need to be mindful of the fact."
Shares in the miner are well off the high for the year of $5.41, closing yesterday at $3.65 - up 7c on the previous day. Smalley said investors had to have their eyes wide open.
"You've got to hope a miner's costs are in US dollars particularly if you're in Australia because of the high value of the aussie dollar.
"It's not open and shut because you've got volatility in the underlying investment and you've also got volatility in the currency as well."
International industry figures show demand for gold from dentists for crowns and from companies for use in electronics was flat over the past year but demand for gold in jewellery rose 7 per cent.
Much of the demand has been from speculative investors, such as hedge funds, said Jon Nadler, senior metals analyst with Kitco Metals.
He warns that gold could plunge - if investors regain their confidence that the US won't default and that the 17-nation European Union won't be threatened by the region's debt problems.
"I wish this was all about the man on the street, pension funds, but it's not," Nadler said.
"It's the type of player that tends to get up at the very next opportunity to find something hot elsewhere.
"Will all this end in tears? Quite likely yes, because I see that the demise of the European Union and the United States as a debt entity is really not on the cards."APN News & Media