''We have no intention to sell gold and this seems to be the policy of the main official gold-holders,'' Herve Ferhani, Bank of France director of foreign exchange told a Gold Fields Minerals Services seminar.
Gold backtracks, off highest for 1-1/2 months "
By Martin Hayes
LONDON, Sept 11 (Reuters) - Gold bullion prices endured a roller-coaster day on Friday, hitting 1-1/2 month highs before getting caught up in the turbulence from U.S. President Bill Clinton's problems, traders said.
At one stage spot gold reached highs above $296.00 an ounce, but within 30 minutes prices shed some $3.00 in active trading. It was fixed at $293.35 an ounce this afternoon in London, down $0.40 from the morning 1-1/2 month high, but still up from Thursday's close of $290.20/$290.70.
''We had a look at the $300.00 level (New York December futures). It failed, and then there was trade selling and some fund profit-taking,'' a trader said.
There was also the volatility in the U.S. stock market, with the Dow Jones index staging a surging rally, jumping 100 points after Clinton apologised to Monica Lewinsky in a national prayer breakfast on Friday.
Traders said the knee-jerk reaction in gold, which fell sharply when the Dow climbed, underlined the market's volatility to wider financial movements.
With all markets on tenterhooks over the expected release of independent counsel Kenneth Starr's report on the Clinton sex scandal, many gold market players opted to square positions ahead of the weekend.
The turmoil in other markets meant news the Czech central bank has sold 31 tonnes of gold this past week did not influence the bullion market unduly. Nor did the Bank of France stating it had no plans to sell any gold in future.
''We have no intention to sell gold and this seems to be the policy of the main official gold-holders,'' Herve Ferhani, Bank of France director of foreign exchange told a Gold Fields Minerals Services seminar.
Maquarie Equities Ltd precious metals analyst Kamal Naqvi said the Czech tonnage was pretty small.
''The tonnage is relatively small and is unlikely to have a disastrous effect on prices. The concern now is that there may be other emerging countries that may sell gold,'' Naqvi said.
Gold's wide price moves today suggested investors were looking at gold as a 'safe haven' as falling stock markets and volatile currencies move out of favour, analysts said.
''There has been short-covering this morning, some of it distressed to lock in profits to mitigate against losses in other sectors,'' analyst Rhona O'Connell of stockbroker T.Hoare and Co said.
Some modest sales were also seen from producers, which traders said was not surprising given that the market has risen from levels around $270.00 in late August.
''Miners who thought that the end of the world was nigh at $270 are selling a little now,'' a trader said.
However, the dollar's decline means that incentives for major South African, Canadian and Australia producer sales are fewer today, O'Connell noted.
''There are the concerns over Clinton, such as impeachment and resignation possibly,'' she said.
But even if this happens it is unlikely to draw a line under U.S. political pain as there are investigatory rumblings over Vice-President Al Gore, who could be a lame-duck President if he succeeded Clinton, analysts said.
So bullion markets may benefit from safe-haven buying as stocks and currencies look less enticing. Traders said the market's next target was the $300 an ounce level last seen in May 1998, although a period of consolidation seems likely in the short-term.
''We have had a $25 move in two weeks - nothing goes up in a straight line,'' O'Connell said.
In other precious metals markets, spot silver ran into resistance at $5.10/$5.15 an ounce and eased to $5.00/$5.03. Platinum dipped to $362.00/$364.00 an ounce but palladium pushed up to $290.00/$300.00.
((London newsroom, 44 171 542 8080, fax 44 171 542 8077, london.commodities.desk+reuters.com))
Copyright 1998 Reuters Limited. |
