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The price of gold went past US$2,000 (NZ$3,009) an ounce for the first time earlier this month and is up more than 30% this year, although it had slipped to US$1,987 by Tuesday evening.
Gold is often used as a safe harbour during times of disruption and as a hedge against inflation.
Chris Smith, general manager at CMC Markets, said both gold and silver prices were “due for a breather” because technical indicators had become stretched after nine weeks of gains.
“Gold started the year at $1,500 and momentum move and demand from investors has pushed it past the prior 2011 peak.”
He said unprecedented monetary and fiscal stimulus had boosted inflation expectations and created a “perfect scenario” for precious metals. Recent weakness in the US dollar had also pushed the price up. The drop in gold prices this week had been prompted in part by a reversal in that trend.
“As real rates move into negative territory it supports gold,” Smith said.
“Even Google issued a 10-year bond at 0.45% last week.”
But he said some forecasters were expecting further strength ahead and there were predictions it could top US$2,300 within the next 12 months.
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