Zeev's Turnips Patch-No Politics (ZEEV)

[basserdan]

*** Gold related post ***

G'morning ml,
Today marks the start of the fifth (and final) year of the Washington Agreement which allows the 15 CB's who signed the agreement to sell an aggregate total of approximtely 400 tons of Au on the open market. The five year agreement was for sales totaling up to 2000 tons.

As I suspected, it didn't take long for the 'announcements' to begin...... <gg>
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Europe gold slips lower, absorbs Swiss sales plan

Friday September 26, 6:26 am ET

LONDON, Sept 26 (Reuters) - Gold was marginally lower in Europe on Friday morning with the market in consolidation mode after a sharp bout of profit-taking on Thursday that followed the market's vault over seven-year highs, dealers said.

Analysts said that bullion's overall uptrend -- sparked by speculative buying -- was still intact, with the market recovering quickly in Europe from a knee-jerk drop earlier on Friday when the Swiss National Bank detailed its gold sales plans. The Swiss National Bank said on Friday it will sell 284 tonnes of gold from excess reserves by the end of September 2004 and a further 130 tonnes in the year after that.

It said it had sold 886 tonnes of gold since May 2000 under a 1999 accord that limits disposals by major European central banks to a combined 2,000 tonnes by September 2004.

The market dropped almost $2.00 an ounce on the news before quickly recovering to trade around $384.00.

Spot gold (XAU=) was quoted at $384.00/384.75 an ounce by 1016 GMT, compared with New York's last trade of $384.20/384.90.

Rhona O'Connell, market analyst manager at the world Gold Council, said in a report that the SNB announcement was "an iteration of the bank's existing schedule for the disposal of 1,300 tonnes of gold over a five-year period and reflects no change in policy."

Bullion drove up to a high on Thursday of $393.30 -- a high not seen since mid-May 1996 -- as speculators piled into the metal, spurred by a surprise OPEC (News - Websites)decision on Wednesday to cut oil output and a weaker dollar that raised bullion's safe-haven appeal.

A weaker dollar makes dollar-denominated gold less expensive for investors using other currencies.

Analysts said the massive number of well-documented long positions on New York's COMEX futures market was weighing on investor sentiment, but the overall uptrend remained with a target of $400.00 an ounce still seen as achievable.

"I think the trend is still higher but I just worry that we've done a little bit too much too quickly. The reason why were up at $385.00-$390.00-plus is that funds have built a record
long position -- partly on the back of a weakening dollar and possibly a weakening stock market," said HSBC metals analyst Alan Williamson.

He said the market had also benefited from plans for exchange-traded gold-backed fund products, such as one proposed by the World Gold Council.

"My worry is that if either the dollar doesn't weaken as much as we're all expecting it to, or if there's further delays to these exchange traded fund products, there might be some short
term weakening in prices," he added.

http://biz.yahoo.com/rm/030926/markets_precious_europe_3.html