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Technology Stocks : Ascend Communications (ASND) -- Ignore unavailable to you. Want to Upgrade?

To: Gary Korn who wrote (35220)	2/18/1998 8:32:00 AM
From: Glenn D. Rudolph	Read Replies (1) \| Respond to of 61433

*****OT****** Gold price to rise later in 1998 - Macquarie Bank Reuters Story - February 18, 1998 01:09 %AU %GDM %GOL %FCAST %MET %ZA %US MBLX SBCJ.J V%REUTER P%RTR By Michael Byrnes SYDNEY, Feb 18 (Reuters) - Gold prices will languish until mid-1998 before tracking higher later in the year, according to an industry report by brokerage firm Macquarie Equities Ltd. The broker is part of the Macquarie Bank Ltd group, which is Australia's biggest bullion dealer. It conducts 25 percent of the world's gold hedging through its joint-venture with South Africa's Standard Bank . The negative factors which had sent the price plummeting would most likely wane throughout the year. "Sentiment will turn slowly back in favour of the yellow metal," Macquarie Equities said. It atttibuted the fall in the gold price to its lowest level in 18 years to fears of further central bank sales, low inflationary expectations, a strong U.S. dollar, gold "dishoarding" in Southeast Asia, and a lagged response from mined gold production to lower prices. The low point of the price cycle would be reached in the first half of 1998, with a modest improvement in the second half of 1998, Macquarie said. Gold was trading at about US$297.50 an ounce in Asia on Wednesday, 35 U.S. cents below the overnight New York close. Macquarie sees the gold price trading in a band between US$280.00 and US$300.00 an ounce in the first six months of 1998 then breaking out to above US$300.00 in the second half. This is seen producing an average price of US$290 an ounce for the full 1998, and US$350 an ounce by 2001. The gold price would be supported medium-term as inflation risks reappeared, the U.S. dollar weakened and mine and market rationalisations occurred, Macquarie said. In the longer-term, a weakening of the U.S. dollar, continued mine closures and market rationalisation were forecast to provide further support to the market. "Into the next century, price appreciation will continue steadily, although not dramatically, as Asia rebounds from its decline and inflation risk reappears," Macquarie said. That gold did not fall further in 1997 indicated that downward momentum was easing, it said. Central bank gold holdings were far more likely to be released into the market now than at any time since the gold standard was introduced and gold prices would only begin to appreciate when the market had adjusted to the increased presence of central banks. Central bank total gold reserves of about 28,000 tonnes compared with annual mined gold production of about 2,400 tonnes. "Central banks are not expected to dump their gold holdings but to gradually reduce them," it said. The planned formation of the European Central Bank in January 1999 sharpened the focus on the potential mobilisation of the 14,000 tonnes of gold held by European central banks. Whatever decisions were taken on this, they would eliminate one element of uncertainty from the market, it said.