To:Bobby Yellin who wrote (281) From: John Barendrecht Monday, Jul 7, 1997 6:05 PM Respond to of 80032
Gold plunges as traders move to new exchange floor By Huw Jones
NEW YORK, July 7 (Reuter) - Gold plunged to new 12-year lows on Monday as jittery speculators rushed to sell the precious metal.
But market dealings were far from glitch-free as angry traders wrestled with the Commodity Exchange's new high-tech home in New York's financial district.
``The gold market is totally hysterical,'' said John Brimelow of B V Capital Markets. ``The bears came back in an exuberant mood and gave the market another savaging.''
The August gold contract closed $6.20 lower at $319.00 an ounce, a level unseen since 1985 on New York's Commodity Exchange.
The latest plunge came after the Reserve Bank of Australia announced Thursday that it had sold 167 metric tons of gold from its reserves.
The sale of 60 percent of the Australian central bank's gold hoard sent an especially bearish signal to speculators because Australia is the third-largest producer -- at 289 tons last year -- after South Africa and the United States.
Market sentiment is overwhelmingly bearish and traders are forecasting the price could slump to $300 or lower.
Analysts said more losses were likely for the precious metal, now in a well-established decline.
``We have had a lot of speculative short-selling in the gold market due primarily of the attractiveness of alternative investments such as stocks, bonds and currencies,'' said Edward Kempf, an analyst for CPM Group. ``We think prices could possibly go down to $300 an ounce, and to $280 after that.''
Gold was already battered before Australia's Reserve joined a growing list of central banks selling metal.
The need for gold as a safe haven in times of high inflation is becoming outmoded, market observers say, with less metal needed in government vaults to underpin currencies.
Scott Mehlman, chief gold dealer at Credit Lyonnais Rouse bank, said the price drop was a continuation of a long-term trend.
``Chunks of metal lying in vaults, that's all it is,'' he said. ``It comes down to 'What can we do with it?' and how much comes out of the ground.''
Analyst Jim Steel at Refco added: ``We have had persistent years of low inflation, good economic growth, and fiscally conservative governments.''
The stocks of gold mining companies also came under pressure as gold slumped.
Barrick Gold Corp. fell $1.81 to $20.125, Newmont Mining Corp. lost $2.25 to $35.625 and Homestake Mining Co. was off 56 cents to $12.44.
Traders wrestling with a fast-falling market also were forced to cope with glitches on the first day of trading at the Commodity Exchange's new high-technology home in Battery Park City in downtown Manhattan.
The COMEX and its parent New York Mercantile Exchange were previously in the nearby World Trade Center.
Traders said telephones were not working properly, but the NYMEX, which bills itself as the world's largest energy and precious metals exchange, said the problem would be solved by Tuesday.
Technical problems that delayed the move to the new $228 million 16-story building have not been totally resolved. Dealers complained about difficulties with their state-of-the-art phones, a lifeline for dealmaking.
``One guy was talking and suddenly he found himself in a three way conversation with another guy who happened to call in on another line,'' said a crude oil trader.
The two cavernous 25,000 square-foot trading floors -- one for the energy exchange and one for the metals exchange -- effectively quadruple the size of the old exchange.
Dealers complained that the price boards are harder to see since they are farther away and the warehouse-like acoustics make it harder to hear. But, most say it is just a matter of adjustment.
To:Dale Schwartzenhauer who wrote (285) From: John Barendrecht Monday, Jul 7, 1997 6:07 PM Respond to of 80032
Gold trading on NYMEX's ACCESS system sets record NEW YORK, July 7 (Reuter) - Gold futures traded a record 3,471 contracts Sunday night on the NYMEX's ACCESS after-hours electronic trading system, topping the previous record of 1,993 contracts set during the February 7 session earlier this year, the exchange said in a statement.
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