Gold prices have dipped today as markets rebound, but this year the precious metal has seen a meteoric rise. "In US dollar terms the gold price is up around 15 per cent, currently trading around [the] $US1,250 an ounce mark," said Jordan Eliseo, the chief economist at ABC Bullion. "In Australian dollars the performance is even better. We're now back above $1,700 an ounce, up the better part of 20 per cent for the year in just six weeks." Gold enjoyed the biggest rally in more than seven years last week, rising 5.5 per cent on Thursday alone. After peaking at almost $US1,900 in 2011 the gold price has been on the slide until this year. "Certainly from a macro perspective, gold is the go-to at this point in time," said Taylor Collison resources analyst Ryan Armstrong. "The market has seen a real deterioration in recent weeks." Central banks are driving a lot of the demand for gold as they diversify away from the US dollar. According to the World Gold Council, banks have bought over 336 tonnes in the second half of last year, an increase of 25 per cent. The US has the biggest reserves at over 8,000 tonnes. However, it is not just central banks buying up gold. China is the largest market for bullion and coins in the world as consumers look for a safe haven due to the weakening yuan. "We're also seeing institutions and the like starting to adopt gold into their portfolios and in Australia the biggest increase in demand is coming from self-managed super funds," said Mr Eliseo. "Where if I look at our business as an example, demand is running at six times pre-GFC levels." Australian mines produce around $15 billion worth of gold each year and it is all refined at the Perth Mint. "Sales are up four times compared to the week before. A client came in first thing Friday morning and bought a million dollars worth of gold," said The Perth Mint's Bron Suchecki. While some investors are buying up big, around 90 per cent of the gold is exported. "We store around $3 billion worth, and only about 25 per cent is for Australia - 50 per cent of those clients are American, the rest spread around the world," said Mr Suchecki. Break through $US2,000 an ounce possible: economist Gold companies are enjoying a bull run on local markets, with $3 billion in market value added to the sector last week alone, according to Paterson Securities. "In terms of multiples ... we're still seeing gold as good value within the ASX," said Ryan Armstrong. The collective market capitalisation has increased by $8 billion to $26.6 billion in the past three months. Despite gold prices and miners having rallied so much over the past year, gold bugs are making even more bullish predictions for the precious metal. "Gold could not only reclaim $US1,800 to $US2,000 an ounce but actually move substantially higher," said Jordan Eliseo. "I think we're going to see a repeat of the 1970s, which would see gold prices move in today's terms to at least $US3,000 an ounce and with downward pressure on the Australian dollar the Australian dollar gold price could go substantially higher."
