Gold has surged to a record high, with the United States dollar being pummelled by major currencies around the world.
The increase in global spot gold prices follows data that US consumer confidence has slipped to seven-month lows and its Federal Reserve central bank is considering another cash injection into the flagging economy.
Gold, as a historical safe haven investment and hedge against inflation, has risen in value almost 20% this year and 85% during the past 22 months, and yesterday hit a record $US1308.93 during trading on the New York Comex exchange.
The worldwide weakness of the US dollar against all major currencies is underpinning the latest surge in spot gold prices, as US investors look to gold and overseas equities markets as destinations to place their funds.
New Zealand Mint bullion dealer Mike O'Kane said because the New Zealand dollar was rising against the US, it was offsetting any gains, but there had been strong interest from overseas buyers in bullion.
He said the $US1300 barrier had been broached quicker than he would have expected, and he was being more conservative than other analysts in picking gold would be at $US1500-$US1600 by mid- to late 2011.
For the first time since the Central Bank Gold Agreement was signed in 1999, less than 100 tonnes of gold had been sold by signatories in a year.
Sales in the year ending September 26 amounted to just 6.2 tonnes, indicating central banks were holding their gold for longer, Mr O'Kane said.
The New Zealand dollar has risen against the greenback from US72.5c 10 days ago to trade around US74c yesterday, while during the same period the kiwi has fallen against the Australian dollar, from A78c to A76.4c yesterday.
Craigs Investment Partners broker Chris Timms said with Australia being the country's largest trading partner, the decline would be good for exporters.
"Other currencies are stronger, because the US economy is in such a fragile state while [other countries] are doing a little better. US investors are buying into overseas investments, including New Zealand and Australia," Mr Timms said.
The Australian dollar rose to a two-year high on Wednesday, peaking at US96.8c, while the euro surged to a five-month high against the greenback, smashing a key resistance level and option barriers on its way up, a signal of further gains in the single euro-zone currency, Reuters reported.
The yen also firmed, pushing the US dollar to below 84 yen, its weakest since Japan intervened in the foreign exchange market two weeks ago to halt its currency's rise, and the Swiss franc hit a two and a-half year high against the US dollar.
