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

To: IngotWeTrust who wrote (10741)	4/27/1998 6:15:00 AM
From: Alex	Read Replies (3) \| Respond to of 116764

Euro meeting closely watched for gold policy [BRUSSELS] Gold investors will be reading the tea leaves at a May 2 meeting of European Union governments for signals on how much the planned European Central Bank (ECB) will control gold reserves worth US$125 billion (S$198.5 billion). Any word on the size of ECB gold holdings from the meeting -- which will focus on the euro currency -- and whether it will prevent sales of EU gold reserves may be crucial for the metal's price. A decision on who will be the ECB's president, expected at the meeting, will be the key to perceptions of how favourable ECB policy will be for gold, which fell to an 18-year low in January on concern about central bank sales. EU governments are meeting to formally approve 11 of the 15 EU member states to start the currency union in 1999, and to set exchange rates among them before the euro's introduction in January. While gold isn't specifically on the agenda, traders will be seeking some indication of gold policy. "This decision, when it finally comes, will be a real milestone for gold," said Tony Warwick-Ching, a precious metals analyst at Flemings Global Mining Group in London. Analysts' predictions for the proportion of the ECB's initial US$55 billion in foreign exchange reserves that will be in gold range from 5 to 30 per cent. "A gold holding of less than 10 per cent of the ECB's reserves will be disappointing to the market, while more than 20 per cent would be seen as good," said Mr Warwick-Ching. Collectively, the 11 governments expected to launch the single currency own about 12,500 tonnes of gold, about five times global mine output in 1997. They include Germany, France and Italy, three of the four biggest gold owners in the world, with only the US having more. With 15 per cent of its total reserves in gold, the bank would only hold about 800 tonnes of the metal at current prices, leaving about 11,700 tonnes to be managed by national governments. Although the unleashing of a large portion of the reserves into the market could lead to a collapse in the gold price, concern about the impact on the gold price wasn't enough to prevent four large gold sales by central banks from Australia, Argentina, the Netherlands and Belgium in the past 18 months. Germany and France, the world's second- and third-largest gold owners, are expected to argue for strict control over gold holdings. But the Dutch and Belgians have together sold about 800 tonnes of gold reserves since 1996 and are seen as less likely to defend the metal's place in the ECB. -- Bloomberg