Gold in NZD terms eyes record highs after RBNZ rate cut

• Gold or XAU/NZD has risen above NZ$ 2,300 and could challenge the record high of NZ$ 2,324.80 in the next few hours.
• New Zealand's central bank cut rates by 50 basis points, catching markets by surprise.

Gold is shining bright in New Zealand following a bigger-than-expected interest rate cut by the Reserve Bank of New Zealand (RBNZ).

The yellow metal is currently trading at NZ$ 2,304 per Oz, the highest level since November 2011 and could test the record high of NZ$ 2,324.80 hit in August 2011.

The RBNZ cut the overnight cash rate (OCR) by 50 basis points to 1% at 02:00 GMT today.  The market was priced for a quarter-point rate cut.

The central bank also trimmed OCR forecasts for 2019 and 2020 and said that the 50 basis point rate cut was necessary to support employment and inflation.

The bigger-than-expected rate cut sent the NZD lower across the board. Notably, the NZD/USD pair nosedived to a ten-month low of 0.6436 following the central bank's rate decision.

With central banks across the globe considering aggressive rate cuts, the path of least resistance for gold is to the higher side. Gold being a hard currency with limited supply tends to benefit from inflationary policies pursued by central banks.