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

To: Alex who wrote (2549)	10/28/1997 6:00:00 AM
From: Richnorth	Read Replies (1) \| Respond to of 116827

Tuesday October 28 1997 Bullion slides on further fund sales SHEEL KOHLI and AGENCIES in London Gold continued to slide in Europe yesterday, after fresh selling from investment funds flooded the market. In London, gold was fixed at US$311.80 an ounce in the afternoon, unchanged from the morning fix, after closing at $316.40 on Friday - a day in which it lost $6. After Swiss proposals last week to sell 1,400 tonnes of its gold reserves, analysts said gold was likely to fall further. "I still see $300 as a big downside target," Ted Arnold, a gold analyst at Merrill Lynch, said. He said European central banks were likely to step up gold sales further ahead of the formation of the European central bank (ECB), which would administer and control the European single currency. Mr Arnold said it was assumed that the ECB would require only a 20 per cent backing of the single currency by gold, which would leave more than 12,000 tonnes in national vaults. "And that gold will be increasingly mobilised. Much more of it will be lent to the market - increasing its liquidity," he said. Traders said investment funds, dealers and "even some old dinosaurs who bought gold on the view that it would hedge against a stock market crash" were all selling yesterday. "We think the next move is down in gold . . . but even if we have a few good short covering rallies on the way, they are likely to be utilised as wonderful forward selling opportunities by producers, dealers and funds alike," Mr Arnold said. Paribas Capital Markets analyst Charles Kernot said the Swiss proposal was the final excuse the market needed to sell. "The most negative aspect of the [proposed] sale is that while it could be done over a number of years, it highlights the fact that even the nation with the greatest linkage to gold as a monetary asset has lost faith," a GNI brokerage house bulletin said.