Gold slumps in Europe on Australian miners' sales
06:42 a.m. Aug 27, 1998 Eastern
LONDON, Aug 27 (Reuters) - Gold continued its downward slide in Europe on Thursday after falling
overnight on a flurry of sales from Australian producers cashing in on their weaker currency, dealers
said.
Gold was last quoted at $280.90/$281.40 an ounce from the previous close in New York at
$282.00/$282.50.
Bullion fixed at a seven-month low of $280.90 in London in the morning against Wednesday afternoon's
fix of $283.15.
Dealers said with gold's sentiment already weakened by stepped-up lending of gold by Russia, a heavy
bout of producer sales from Australia forced the metal further down.
''The sell-off overnight is pretty predictable given the level of the Australian dollar. That is the main
driving force this morning,'' one London dealer said.
Australian dealers estimated that about five tonnes of gold was unloaded.
Gold in Australian dollar terms was worth around A$500.00 an ounce on Thursday morning -- a near
two-year high.
The Australian dollar hit a fresh all-time low on Thursday, dropping below the key 56 cent level to
$0.5598.
''There is obviously producer selling out of Australia and the Russian situation is continuing to weigh on
the market,'' the dealer said.
He said the precious metals complex was likely to remain under pressure in the short-term.
Dealers said they saw gold weakening further to around $277.00-$278.00 an ounce.
Brokers GNI said in a report that the Australian dollar's alarming slide and that of the currencies of other
major producers like South Africa and Canada would continue to weigh negatively on the bullion
market.
''Whatever the reasons for the Australian fall, the gold market is likely to continue to suffer from related
producer hedging,'' the GNI report said.
Silver suffered along with gold.
It was last quoted at $4.99/$5.02 after dipping to as low as $4.95 in early trade.
GNI said unconfirmed rumours were that several former Eastern-block countries were selling silver
reserves to raise hard currency.
Dealers said silver gained some support from buying out of India where the demand picture looked
good in the coming wedding season.
But investment funds in New York were sitting on large silver stakes which would be sold into any rally,
one dealer said.
''The big element is actually going to be the (New York) funds who are still long in silver,'' he said.
Silver stocks on COMEX have been dropping steadily.
''I think silver will be sold into any rallies up to $5.15 simply because the funds have been sitting on
silver and getting it wrong,'' the dealer said.
Platinum was last quoted lower at $357.00/$359.00 an ounce against the New York close of
$360.00/$362.00.
Palladium was slightly lower and last quoted at $277.00/$282.00 against the previous $277.40/$282.40
close.
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