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Gold stocks gleam
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September 27, 1999: 7:09 a.m. ET
Market sentiment turns positive after European banks pledge to limit sales
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LONDON (CNNfn) - Gold prices surged to a four-month high Monday, boosting mining stocks in the wake of a pledge by European central banks to retain the metal as a key plank of their reserves.
After jumping almost 5 percent to reach $285 an ounce in Asian trading, gold was priced at $281.70 at the morning fix in London compared to Friday's close of $270.
Gold prices have tumbled since the Bank of England announced plans earlier this year to sell 415 metric tons of gold over five years to rebalance its reserve portfolio.
Prices fell to 20-year lows below $260 an ounce in July, less than a third of gold's peak above $800 in the mid-1980s.
However, the commitment by the European Central Bank (ECB), 15 European Union member state central banks and the Swiss central bank to cap gold sales to 2,000 metric tons over the next five years has reversed the downbeat market sentiment.
Rhona O'Connell, gold strategist at T. Hoare in London, said the statement lifted the cloud hanging over the market for much of the year.
Traders disbelieved earlier statements from the ECB as well as Switzerland and the United States that they were not planning widespread sell-offs.
The banks also pledged to limit leasing and futures trading, cutting the opportunities for speculators to put further press.
O'Connell said prices were set to top $300 by year-end.
The improved climate sent mining stocks soaring, with Billiton (BLT) up 4.7 percent and Anglo-American soaring 8.5 percent in London. 
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World Gold Council
ECB
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