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Gold/Mining/Energy : Gold Price Monitor -- Ignore unavailable to you. Want to Upgrade?

To: PaulM who wrote (41950)	10/3/1999 10:30:00 PM
From: goldsnow	Read Replies (1) \| Respond to of 116762

Triple rate rise threat The Federal Reserve has already raised rates twice this summer Central banks from around the world are considering whether to increase interest rates. The Bank of England, the Federal Reserve, and the European Central Bank (ECB) will all announce their decisions this week, in what could mark a decisive change in the world economic climate. Economic growth in Europe has picked up The low interest rates of the past few years have boosted economic growth, especially in the United States, moderated the effects of the world financial crisis, and led to a stock market boom. But now central bankers are getting worried that inflationary pressures may return. The US central bank, the Federal Reserve, has already raised rates twice, while the Bank of England surprised the markets by following suit last month. Now, with the first signs of inflationary pressure in Europe, there are concerns that the ECB might follow suit. Any coordinated action to raise rates, however, threatens to depress stock markets, which are already worried by the change in climate. And it could lead to higher unemployment, especially in Europe, where it already tops 10%. Fed first The Federal Reserve will move first, announcing its decision on Tuesday. There are fears that even if the central bank does not raise rates, it will announce a "bias towards tightening", signalling a rate rise in the future. Fed watchers have been worried by the higher raw materials prices reported by the manufacturing sector last week, which could feed into price hikes in the shops. Up to now, the low price of raw materials like oil has helped keep the lid on inflation. There are also concerns that the US consumer spending continues to boom, with people borrowing to spend rather than saving their income. But with the overall level of inflation still low, the Fed could wait and see whether its two interest rate raises have any further impact. "It'll be a bit of a closer call than it was before," said David Hale, chief global economist at Zurich Group. UK fears house price boom The Bank of England's Monetary Policy Committee, which begins its two-day meeting on Wednesday, will also be split over the prospect for inflation. House prices have rocketed in the UK Its main worry is that UK house prices appear to accelerating, with the Nationwide reporting a price rise of 11% year-on-year. It was a huge house price boom in the l980s that last destabilised the UK economy. It has also seen evidence that manufacturers are growing more optimistic, despite the high pound. But with sterling nearly at an all-time high against the euro, it may worry that further interest rate hikes will make Britain's manufacturers more uncompetitive. The Engineering Employers Federation will warn this week that export prospects remain depressed. Already the tight labour market is beginning to force up wages, with electrical workers winning a 30% wage increase last week from building contractors. "Base rates are going up. The only question is timing," said Gerard Lyons of Standard Chartered Bank. ECB: joker in the pack And for the first time, economists believe there is a real chance that, when it meets on Thursday, the European Central Bank will raise rates from their current level of 2.5%. European growth appears to be recovering and inflationary pressures are now growing, according to ECB chief economist Otmar Issing. "We have already said in July that downward risks for prices disappeared in May and we had a stable situation then. Now there's a risk on the upside," he said on Friday. And ECB vice president Christian Noyer warned earlier that the central bank may have to act earlier rather than later to head off inflation. "We think the Fed will hold off but announce a bias towards tightening, the Bank will announce a quarter-point increase, and the ECB will do so too," said Nick Stamenkovic of Ideaglobal.com. It will not be a prospect relished by the world's stock markets, which have been languishing since the summer. But, paradoxically, it may be a sign that the world's major economies have recovered more quickly than expected from last year's financial turmoil. news.bbc.co.uk

To: PaulM who wrote (41950)	10/4/1999 3:37:00 AM
From: Alex	Respond to of 116762

Gold heading to become a rare commodity By Muhammad Aslam Gold prices on the local bullion market swelled to an all- time peak level of Rs6,000 per ten grams followed by news of pressure on supplies after the leading European central bank put a cap on further sales of the yellow metal for the next five years. There was a confusion on the market as the highups of the Bullion Dealers Association could not precisely decide how to react and curb the speculative run on the gold and in the meanwhile price flare-up continued unabated. "The current price flare-up is a bonanza for the informal traders as a difference of over Rs1,000 per ten grams in the selling prices of Pakistan and India is an attractive bait for them", said an official of the local bullion market. He said sanity will return to the market as the wide price differential could flood the market with supplies from India and Dubai, the two major sources of both official and unofficial outlets. An easy solution to check speculative increase was found in suspending the trading for three days from Sept 27 to 29, but it failed to check the flare-up as prices soared to Rs6,000 per ten gram in kerb trading, although it was pretty difficult to assess volume of physical business. "There was a near-shock among the womenfolk as the news of an unprecedented increase in gold prices have blunted the sharp edge of their sentimental attachment with the commodity," said a leading bullion dealer. Gold prices had hit the all-time low level on the London market at $133.26 per ounce on Jan 26,1979 after the IMF sold 0.780m ounces of the commodity in its 6th series of gold sales but recovered to $517 per ounce on Jan 4,1980, the all-time highest touched by the world bullion rates. The smart recovery in prices was attributed to a weak dollar and surge in oil prices to $24 per barrel. "Among other things, the current price flare-up reflects the weakness of the rupee against the dollar as the local prices of gold did not touch the high mark of Rs4,000 per ten grams despite the fact that world prices had soared to $517 per ounce in 1980", said a bullion trader. How many rupees 10 grams of gold will cost if the world prices again soar to $517 an ounce during the current bull-run, which has pushed prices from $256 to $313 per ounce on Wednesday last, he asks. "It is a terrible thought for those women who love jewellery but have not the matching affluence to buy a tola of it", said a jeweller jokingly. But in kerb dealings prices were being quoted around Rs.6,200 per ten grams and dealers predicted they could rise further on panic buying if trading allowed during the next couple of sessions as the commodity is in a terribly short supply. On September 28, prices had touched the two-year peak level of Rs5,025 per ten grams but fell modestly the next day as some of the speculators eased their grip on supplies partly because of arrivals through unofficial channels, dealers said. But a fresh price flare-up on the world bullion markets where it breached the barrier of $300 per ounce and was last quoted around $313 per ounce further accentuated the speculative bull run on the gold. Prices on the local bullion market had soared to Rs4,735 per ten grams followed by a steep increase in world rates a week earlier after the European central banks stopped further sales of gold but eased temporarily as the supply gaps were filled in quickly from various sources. The current bullish trend is expected to be sustained as the market is now dominated by speculators and prices could rise further as leading among them may not loosen their grip after creating artificial shortage of the commodity. Pakistani jewellers consume about 100 tonnes of the yellow metal each year and import of the commodity is allowed against exports of jewellery after paying a nominal duty of $1.5 per ounce, dealers said. The speculative increase in prices was also attributed to a number of rumours including holding back of stocks by some leading dealers to push prices higher, said a trader. "We don't rule out the possibility of inflow of massive investment buying as the gold is generally considered as a safe asset in uncertain political conditions", another claimed. The Pakistan Bullion Dealers Association allowed the re- opening of the market after three closures but failed to check the speculative increase as is reflected by the ruling prices. dawn.com