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Gold loses its luster
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March 16, 1999: 10:31 a.m. ET
Price recovery stilted by talk of IMF sales to boost debt relief efforts
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LONDON (CNNfn) - Gold prices slipped Tuesday after being pulled down sharply when the International Monetary Fund was again urged to sell up to 100 tons of reserves to fund debt relief for developing countries.
The IMF issue has put an end to gold's brief rally in recent weeks, with the prospect of central bank sales providing a series of key resistance levels. Romania is the latest possible entrant to the market, with speculation that it may follow Russia's move last year and sell gold stocks to boost hard currency reserves.
The London market fixed gold prices at $286.80 a troy ounce Tuesday, down on Monday's $289.70 and nearly 3 percent below last Thursday's 11-week high of $294.00.
The IMF debate was revived at the last G7 summit by U.K. finance minister Gordon Brown, though the markets shrugged off the prospect of actual sales. However, French president Jacques Chirac lent his support Monday, though the Bundesbank and the Japanese ministry of finance have given the proposals a cool reception
Dealers and analysts in Europe and Asia believe the price fall has been overdone and took comfort from remarks made Tuesday at an Australian gold conference. Nigel Lawson, a former U.K. finance minister, hinted that the European Central Bank would not sell its reserves at a time when the euro remained weak.
Price movements have been exaggerated by extremely light trading in recent weeks, with the London Bullion Market citing February as the quietest month since records began.
Gold stocks have been hard hit, with Toronto's gold sub-index slipping 2.9 percent Monday. Anglogold, the world's largest producer, saw its shares slip 3 percent on the Johannesburg exchange Tuesday. Its stock has lost a quarter of its value in the past six months.
-- from staff and wire reports
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IMF
World Gold Council
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