"Unexpected"? There's a laugher for the week-end.
Bank intervention pushes gold lower
By Adrienne Roberts in London
FT.com site; Jun 28, 2002
Gold prices dipped on Friday after unexpected central bank intervention in the foreign currency markets.
Japan enlisted the European Central Bank and the US Federal Reserve to help sell yen to prevent the surging Japanese currency from smothering Japan's export-led economic recovery.
The US dollar strengthened against both the yen and the euro, triggering some gold sales. The metal, which had reached a session high of $320.75 an ounce in morning trade, fell to a low of $316.85. It ended London's benchmark afternoon fixing at $318.50 a troy ounce.
Gold hit $330.30 an ounce on June 4, its highest since October 1999. But it has failed to regain those levels. "Gold has underperformed in June, especially when examined in other currencies," says John Reade, analyst at UBS Warburg in London. "This performance appears to have prompted profit-taking from long speculators and gold looks vulnerable to further profit-taking."
Although the dollar gold price has shown resilience, UBS points out that by this week the euro gold price had fallen from a recent high of ý349 an ounce to just below ý322 an ounce. This implies that, while speculators retain a keen interest in the market, fundamental demand is less strong.
Crude oil futures had a lacklustre end to the week, despite Opec's decision on Wednesday to maintain its reduced output quotas for another three months.
The WorldCom accounting scandal, which broke on Wednesday, dragged equity markets lower and contributed to the bearish tone of the market. Oil futures were also affected, with the market increasingly worried about the prospects for economic recovery and increased crude demand.
Still, crude futures were looking firmer compared with last Friday, when there was talk that Venezuela might increase its production. In London August Brent closed up 13 cents at $25.58 a barrel compared with $24.75 the previous week. By theNew York close, Nymex WTI settled unchanged at $26.86 a barrel, compared with $25.82 the previous week.
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