Sell the rumor...
[B] WRAP: Gold falls on report France mulling sale of reserves
Updated Mon 3/27/2000 16:02 EST
By Melanie Lovatt, Bridge News New York--Mar 27--Gold prices tumbled Monday as the metals market latched onto a report that France is considering selling gold reserves to bolster its pension system. Gold for April delivery tumbled to a 2-month low of $280.20 per ounce, before edging slightly higher to close at $280.50, down $4.60, or 1.6 percent, for the day. Gold prices tumbled after the influential French daily Le Monde reported that France's ruling Socialist Party was debating whether to push the Bank of France to sell some of its gold reserves in order to bolster the French state pension system. The gold sale was reportedly suggested to French Prime Minister Lionel Jospin by Parliamentary Finance Commission Chairman Henri Emmanuelli last Tuesday, said Le Monde, which added that Jospin "showed interest" in the idea. In September, the Bank of France joined 14 other European banks in endorsing a Washington agreement which restricts the banks' official gold sales over the next five years. And while France is expected to comply with the accord, analysts said the report still weighed on gold market sentiment. While it is unlikely French sales would go ahead any time soon, the gold market is "clearly very nervous," said Bill O'Neill, commodities analyst at Merrill Lynch & Co. The Bank of France holds some 3,200 tonnes in gold reserves worth about $26 billion, according to latest estimates, excluding what has been transferred to the European Central Bank. This is the third largest stock held by any country after the U.S. and Germany. Gold prices have been buffeted repeatedly in recent years by gold sales by many of the world's major central banks, which have sought to turn some of their gold holdings into cash which can invested to achieve higher rates of return. End
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