Disarray in the world's currency markets has underpinned a surge in global spot gold prices to set a second-highest record of $US1016 ($NZ1425) - possibly setting the scene to breach last year's all-time gold high of $US1033, two analysts say.
Yesterday, the New Zealand dollar hit a 13-month high of US71.5c against the US dollar, hit a 12-year high against the British pound and continued its six-month rise against the Australian currency, to A81.75c.
Gold's overnight rise to $US1016 on the New York stock exchange's Comex division followed gold having topped $US1000 six times since September 8 as the greenback continued to weaken and investors went to higher-return, higher-risk markets or gold.
Craigs Investment Partners broker Peter McIntyre said because of investors returning to the safe haven of gold, against the continually weakening greenback, it "appears inevitable" that gold would push beyond the record $US1033.90 set in March last year, and the kiwi would retest the US80c threshold before the end of the year.
"There's disarray in the global currency markets because of governments' exposure around the world in underpinning financial markets, plus China's overexposure to the US dollar," he said.
China holds the largest cache of greenbacks, but is concerned with the erosion in value and has been increasing its gold reserves in recent years.
Mr McIntyre said the trillions of dollars in fiscal stimulus injected by the British, European and United States governments had respectively weakened their currencies in the eyes of investors, who instead had turned to the yen.
"In a turnaround, US investors have been dumping their own [US] dollar in carry trading," Mr McIntyre said.
Carry trading, where investors of low-interest countries go offshore to countries offering higher interest rates, has been adopted by US investors because of the low US interest rates.
New Zealand Mint bullion dealer Mike O'Kane expected short-term profit-taking from gold investors to occur during the next few days.
He said US finance wires were reporting demand for gold from several countries' central banks alone was expected to push the price through $US1100 per ounce by early in 2010.
Gold was positioned well to appreciate both in in the short term and the medium term, with further weakening of the greenback, plus the influence of US central bank Federal Reserve chairman Ben Bernanke having this week said the US recession was at an end, further fuelling gold demand with expectations of higher inflation.
Mr O'Kane said China purchased about 450 tonnes of gold in the past five years, but this had not undermined the price because it was bought "quietly in the [price] dips".
He said not only had gold's price surged, but base (industrial) metals, such as lead, tin, zinc copper and nickel had for the second time in a fortnight also made overnight gains of 3%-5%.
