Anybody know if Tanami have hedged their sell price to a fixed amount? This may explain it's static performance over the last few months in the face of a rising gold price. While the rising Oz dollar negates the effects to some extent, gold has now risen 20% since it touched US$1000 while Oz dollar has stayed in that .90 to .94 range.
LONDON — The price of gold reached above 1,200 dollars an ounce for the first time on Tuesday as a weak US currency pushed up demand for the precious metal viewed as a safe-haven investment, analysts said.
Gold struck a record high 1,201.63 dollars an ounce on the London Bullion Market at 1639 GMT.
It later pulled back slightly to stand at 1,199.65 dollars.
Gold has struck historic peaks over recent days and weeks as the dollar drops against major rivals the euro and yen.
"As ever, another painful week for the US currency saw new highs for gold," VTB Capital commodities analyst Andrey Kryuchenkov said on Tuesday.
In recent weeks, gold has smashed record after record also on the back of inflationary fears and increasing moves by central banks to diversify assets away from the greenback.
The yellow metal, whose two main drivers are jewellery and investment buyers, has also won favour in the uncertain economic climate and fears of a mounting Dubai debt crisis.
"Gold continues to benefit from an almost 'perfect storm' of weak currencies, minimal interest rates, fears about future inflation and fears about financial stability," said Capital Spreads analyst Simon Denham.
"None of these worries looks like going away any time soon and so the march higher goes on."
The weaker US currency makes gold cheaper for holders of rival currencies, stimulating demand for the metal and eventually lifting prices.
Gold prices had also been driven higher after last week's purchase of IMF gold by Sri Lanka's central bank.
The International Monetary Fund (IMF) announced it had sold 10 tonnes of gold to Sri Lanka's central bank for 375 million dollars as part of a restructuring of its financial resources.
The record run also came after last week's newspaper report that India was mulling the purchase of more IMF gold reserves.
"The overall sentiment on gold remains bullish, also spurred by rumours last week that India was ready to buy more IMF gold, according to an article in India's Financial Chronicle," said analyst Kryuchenkov.
"The IMF declined to comment when asked by the media and we do believe it is just pure speculation at the moment."
He added: "Sri Lanka bought 10 tonnes of the precious metal, also helping to stir up positive vibes yet again.
"Granted, it was not much, but this was nevertheless supportive with increasing rhetoric over central bank diversifications and US inflation expectations still running high as we go into 2010."
Canadian mining giant Barrick Gold meanwhile on Tuesday announced it had eliminated all of its hedges on the world's largest gold production and reserves, hoping to profit from rising gold prices.
The gold hedges were contracts whereby Barrick -- the world's number one gold producer -- sold gold ounces it expected to produce in advance for a fixed price.
In the meantime, if the price of gold increased, Barrick was obligated to sell its gold at the lower price or buy it in the marketplace at a higher price to meet its contractual obligations.
Hedging is normally used to insulate companies from market price fluctuations and provide a level of financial stability for their operations.
Barrick announced in September it would pull the plug on its remaining gold hedges, as it was not benefiting from any increase in the gold price, which is forecast to continue rising over the long term as deposits are depleted.
"Our positive view on the gold price led us to accelerate the elimination of these contracts ahead of the schedule we had established," said Aaron Regent, Barrick's president and chief executive.
