Gold Price Update: In AUD Terms, Gold Looking Good

Gold Price Update: In AUD Terms, Gold Looking Good

In this gold price update, we are changing tack.

In previous pieces I’ve focused on gold in USD terms. This time we are looking at it in AUD terms.

It currently stands at $2,359.

You can see how XAUAUD is looking below:

Gold Price Chart 1


With the RBA cutting rates and already beginning covert QE, we look at what this means for ASX gold stocks. This time around ASX-listed gold stocks like Newcrest Mining Ltd [ASX:NCM] may fare better than they did during the GFC.

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Gold price holding up as AUD crashes

The Australian dollar held its value during the GFC, in part because we still had relatively high interest rates.

You can see the RBA cash rate below:

RBA Cash Rate

Source: RBA

At its worst, it only went as low as 3% — even at the height of the crash.

And the recent price action on the AUD below:

Gold Price Chart 2 - Gold in AUD


A lower AUD benefits exports of gold from Aussie shores.

What are Aussie gold stocks like Newcrest Mining doing today?

As you can expect, a number of Aussie gold stocks went up today as the market took another hit.

The biggest of the bunch, Newcrest Mining, gained 3.38%, rising to $24.81.

You can see the Newcrest share price was oversold on the Relative Strength Index (RSI) below:

Newcrest Mining Share Price Chart


Now, Newcrest’s operations may be disrupted in this downturn.

But there is a feeling out there, that the AUD could remain depressed for a significantly long time.

Once things get back to normal, this could play into Newcrest’s hands.

As a result, I don’t think Aussie gold stocks will be sold off in the same way they were during the GFC.

As you can hopefully see, there are different currency dynamics at play this time.

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Lachlann Tierney,
For The Daily Reckoning Australia