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Gold/Mining/Energy : Gold and Silver Mining Stocks -- Ignore unavailable to you. Want to Upgrade?

To: TheBusDriver who wrote (1896)	8/22/2001 9:54:42 AM
From: Stephen O	Respond to of 4051

Gold Rises as Euro Gains on Increasing Business Confidence London, Aug. 22 (Bloomberg) -- Gold rose 1 percent as the euro reached a five-month high against the dollar, prompting demand from European investors at a time of the year when sales increase in Asia. The dollar's drop makes gold, denominated in the U.S. currency, cheaper for non-U.S. buyers. The euro gained 1.4 percent after the Munich-based Ifo research institute reported confidence among German executives rose unexpectedly in July. ``The market is reacting to the weaker dollar,'' said Hennie Rijnbeek, a trader at Rabobank. ``More buying is coming in, mainly funds'' speculating on higher prices. Gold for immediate delivery rose as much as $2.925, or 1.1 percent, to $277.775 an ounce in London. The metal has risen 2 percent so far this year. Consumers in Asia, especially India, the world's biggest gold buyer, are stepping up jewelry purchases because of the coming marriage season, the main occasion for buying gold, Rijnbeek said. The Indian wedding season, which usually accelerates in autumn, will likely be even more active this year because of a greater number of auspicious days for marriages under the Hindu calendar, according to the World Gold Council. Slowdown Nevertheless, in the second quarter an economic slowdown in Turkey, Taiwan, Pakistan and Japan outweighed an increase in Indian gold purchases, driving global demand down 3 percent from the year-earlier period. As the global economy loses steam, today's advance in gold may be short-lived, traders and analysts said. Previous rallies in the price of gold lasted three days in June and only one day last month. ``We see some occasional spikes,'' Rijnbeek said. Central banks, the biggest holders of gold, continue to sell their reserves, switching to assets that offer greater returns, such as bonds. Yesterday, the European Central Bank said one of its members sold four tons of gold as part of a 1999 agreement among 15 European central banks. The seller was most likely the Netherlands, said John Reade, an analyst at UBS Warburg. Speculators The present rally may struggle because speculators have already bought gold and now sell, traders and analysts said. As of Aug. 14, speculators on a net basis had contracted to buy 32,869 gold contracts, or 3.29 million ounces of gold, the biggest bet on gold since the end of May, according to the U.S. Commodities Futures Trading Commission. Over the past week, speculators have probably bought even more, Barclays Capital analysts Kevin Norrish and Howard Patten said in a report. ``When funds decide to exit the market they tend to do it en masse, with disastrous consequences for gold prices,'' they said. ``We see current dollar weakness as temporary. As this realization dawns on the funds, it's likely to result in a sharp fall in prices.'' --Vladimir Todres in the London newsroom (44 20) 7673 2347, or vtodres@bloomberg.net/tc