To:Robert Salasidis who wrote (192)
From: John Barendrecht Thursday, Jul 3, 1997 10:11 PM
Respond to of 79916
Gold ends at 12 yr low in NY precious metals trade
NEW YORK, July 3 (Reuter) - Gold prices slumped to a 12 year low Thursday in late pre-holiday New York trade, leading COMEX and NYMEX precious metals futures to a lower close across the board, after news the Australian central bank had sold 167 tonnes of gold from reserves in recent months.
``The Australian disposal was a forward sale arranged sometime ago, with only the deliveries occurring now, so you could argue the market has already at least partly discounted it,'' Refco New York economist James Steel said.
``But it confirms that central banks worldwide, not just European central banks, are mobilizing their gold reserves to achieve better returns,'' he said.
``So, when no pre-holiday shortcovering bounce occurred, funds took the opportunity to sell short again,'' he said.
COMEX and NYMEX are closed Friday for the U.S. Independence Day holiday, and will re-open Monday morning, after a move to a new building in downtown Manhattan.
In the bullion market, spot gold ended quoted $325.00/50, after briefly seeing a low at $323.70 an ounce, just below a low around $325.10 seen in March 1993.
The move took spot gold down to its lowest level since early December 1985, when gold was recovering from a low at $281.00 an ounce seen in February 1985.
Earlier in London Thursday afternoon gold had fixed at $332.55, compared to the New York close Wednesday around $331.10/60.
COMEX August gold ended down $7.10 at $325.20 an ounce, after seeing a new life-of contract low at $324.00, led by heavy fund selling at the close, with one broker offering about 8,000 lots, traders said.
Hedge fund selling has accelerated this week, with COMEX gold open interest rising a further 3,170 lots Wednesday to 199,278 contracts, its highest level since February.
A strong U.S. dollar, and a strong U.S. stockmarket, along with low inflation have turned investors away from gold since the precious metal saw seven year highs at $417.00 in Febuary 1996.
Sales of gold by European central banks in 1996 and 1997 have also overhung the market, with Belgium confirming a 203 tonne sale in March 1996, and Holland reporting a 300 tonne sale in January 1997, before Thursday's news of a 167 tonne (5.36 million troy ounces) sale by the Reserve Bank of Australia (RBA).
The RBA said it had sold the gold forward over the past six months, with the 125 tonnes delivered in June, and the balance to be delivered in August and September this year.
The sales reduced the RBA's gold holdings by 67 percent to 80 tonnes from 247 tonnes.
The RBA said it had concluded a gold holding was necessary as a contingency measure, but the previous level of gold holdings, representing about 20 percent of its total gold and foreign currency reserves, was not justified.
According to IMF IFS data the RBA's reserves totalled $14.9 billion at April 30.
``The principal reason for this conclusion was that a country in Australia's position, with large gold reserves in the ground and high annual production, derives negligible benefits from holding a significant proportion of its international reserves in the form of gold,'' the RBA said in a statement.
Australia produces about 300 tonnes of gold a year, making it the world's third largest gold producer.
Meanwhile, COMEX September silver ended down 7.5 cents at $4.57 an ounce, after seeing a new contract low at $4.56.
In the bullion market, spot silver fell to a two-and-a-half year low at $4.55 an ounce.
In platinum group metals (PGMs), NYMEX October platinum ended down $2.00 at $404.70 an ounce, while NYMEX September palladium closed off $1.50 at $173.00 an ounce.
But the physical PGM market was quiet, with the U.S. operations of key refiners Johnson Matthey and Engelhard both closed Thursday for the holiday weekend.
PGM dealers continue to await the resumption of Russian platinum and palladium exports which have been suspended for six months, pushing up prices sharply this year.
Russia supplies about 60 percent of the world's palladium and 20 percent of its platinum.
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