Instead, inflation has remained subdued and the economy kept recovering, albeit at an uneven pace. That has boosted demand for the U.S dollar.
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Today's US$1,106 an ounce price is about 40 per cent below its recent peak and the lowest price since March 2010.
New Zealand Bullion Depository's chief operating officer, Michael O'Kane, said there was wholesale local interest in gold around five years ago when the market was high.
O'Kane said many of these people will hold on to gold and wait for prices to lift.
"Talking to people yesterday, they're not worried about what the price is doing right now, they're just curious as to why...the majority of people I deal with aren't buying it as a speculative item," he said.
"In New Zealand dollars we're looking at $1675 an ounce. At its height it was about $2200.... most people who are buying physical gold don't look to turn it around in a 24-hour period, they're buying to hold for five, ten or twenty years".
O'Kane said he was "quietly confident" gold prices would go back up.
"It won't happen this year, it might not happen next year but it will eventually start to pick back up as inflationary pressures bear back on the global economy," he said this morning.
When investors are worried about the outlook for the U.S. and the global economy, they tend to favour gold. But when the U.S. stock and bond markets are strong, as they are now, investors don't really see a reason to hold gold which, unlike stocks and bonds, doesn't produce any income.
The U.S dollar is strengthening as the Fed moves closer to raising interest rates for the first time in almost a decade. The prospect of rising interest rates and higher yielding U.S. assets has boosted the allure of the U.S. currency against other major currencies such as the euro and the Japanese yen.
The dollar has surged 21 percent against a basket of major currencies over the last year as central banks in both Europe and Japan have kept using economic stimulus to try and strengthen their economies. While the Fed is considering rate increases, interest rates will likely stay low in these regions for some time to come.
Fed Chair Janet Yellen has maintained that the central bank will probably raise its benchmark interest rate later this year if the economy continues to improve. She reaffirmed that view during a report to Congress last week. The Fed's benchmark interest rate has been near zero since December 2008.
Gold's allure as a store of value in times of crisis also appears to be fading. Neither the recent stock market crash in China nor the Greek debt crisis succeeded in restoring the appeal of gold.
- with AP