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Gold/Mining/Energy : Euro Impact on Gold, USD ... -- Ignore unavailable to you. Want to Upgrade?

To: banco$ who wrote (177)	12/30/1998 10:54:00 AM
From: Eashoa' M'sheekha	Respond to of 289

11:12 a.m. Jul 08, 1998 Eastern By Patrick Chalmers LONDON, July 8 (Reuters) - Gold fell two dollars on Wednesday after European Central Bank (ECB) president Wim Duisenberg gave more details about its role as a euro-reserve asset. The Dutchman said gold would make up 15 percent of the new bank's planned 39.5 billion Ecus ($43 billion) of reserves, adding that the decision had no implications for overall central bank gold reserve levels. One analyst said the immediate sell-off after the news reflected disappointment that Duisenberg had not mentioned any freeze on central bank sales by euro countries nor made clear how reserves would be managed, as some dealers had expected. ''I think that maybe there were some buyers hoping there would be some comments regarding the ECB reserve management rules,'' said Kamal Naqvi, precious metals analyst at Macquarie Equities Ltd. ''New York had expected fairly supportive words on limiting gold sales and obviously that's not been realised,'' he said, adding that gold's share in reserves was already in the price. ''The fact that its 15 percent rather than 10 percent is no great news. I guess that its marginally better but given that the news was already factored in, they more or less ignored it,'' he said. Avinash Persaud, global head of foreign exchange and commodities research at J P Morgan, said further market falls were likely once people realised that 15 percent could become a marker for all central banks within the euro zone, not just the ECB itself. ''The ECB's share is actually quite a small part of the total reserves. Fifteen percent will probably become a benchmark, not just for the ECB but for all the central banks involved,'' he said. ''I think what's going to happen in Europe is that we are going to see the creation of two distinct pools of reserves, one of which is the ECB's 50 billion Ecus and the other, much greater part, which will be held by the national central banks for investment returns rather than for liquidity and (currency) intervention,'' Persaud added. And that, he said, meant a likely return to last January's 18-1/2-year-low of $276.50. ''We continue to believe that we will revisit the 18-year low in around September. Clearly the gold market is being driven by a number of factors, the central banks question is one, dollar/yen is another,'' he said. Rhona O'Connell, precious metals analyst at brokers T. Hoare & Co, disagreed, saying the 15 percent chosen compared well with average holdings around the world. ''This is at the upper end of the previously stated range and exceeds the world average weighting of 13 percent (with gold valued at $290),'' O'Connell said in a market commentary. She highlighted Duisenberg's remark that the ECB decision had no implications for central banks gold holdings overall. ''This implies that a degree of autonomy over reserve management will continue to accrue to member nations and on that basis the market will probably react neutrally. ''Although few member nations can be seen as possible sellers in the future, the market remains frightened of such developments and will remain nervous until the outlook clears,'' she added. Duisenberg himself said on Wednesday that dollars, gold and other reserve assets held by national central banks would be brought under indirect ECB control by the end of 1998. Peter Hillyard, vice president of the commodity trading group at Bank of America, said Wednesday's news, and the market's reaction to it, were fairly insignificant. ''I think there was a hope that the ECB would veto any sales by the national central banks,'' Hillyard said, adding that dealers had not interpreted Wednesday's news that way. ''The market seems to have considered that this gives the banks a free rein but has it changed anything? I'm not so sure,'' he said. ''There's nothing here that's new, I think the market's been looking for a reason to sell,'' he added. Gold was last trading at $292.60/$293.10, a dollar down on its level before the ECB statement and $2.50 off New York's Tuesday close. ((London Newsroom +44 171 542 8057. london.commodities.desk+reuters.com)) Copyright 1998 Reuters Limited.

To: banco$ who wrote (177)	12/30/1998 10:59:00 AM
From: Eashoa' M'sheekha	Read Replies (2) \| Respond to of 289

09:56 a.m. Jul 08, 1998 Eastern FOCUS-Duisenberg says ECB to control ESCB gold, FX FRANKFURT, July 8 (Reuters) - Dollars, gold and other foreign reserve assets held by national central banks will be brought under indirect control of the European Central Bank by the end of 1998, ECB President Wim Duisenberg said on Wednesday. The statement may go some way to reassuring the gold and foreign exchange markets that ''excess'' national reserves will not be dumped and thereby depress prices after EMU (economic and monetary union) starts in January next year. ''Before the end of this year the governing council will have to adopt an ECB guideline...which will subject all operations in foreign reserve assets remaining with the national central banks, including gold, to approval by the European Central Bank,'' Duisenberg told a news conference. Duisenberg confirmed that the 11 euro zone central banks would pool 39.5 billion euros of their foreign reserve assets with the ECB on January 1, 1999, according to each bank's share in the ECB's capital. Gold would make up 15 percent of this total, while unspecified other ''foreign currency assets'' would make up the remainder. Gold has been under pressure for the last 18 months due to fears that central banks of the 11 euro-zone countries would sell off surplus gold. The price of the metal sank in January to 18-1/2 year lows below $280 an ounce. After Duisenbergs statement, the price fell about two dollars an ounce on market disappointment that he had not announced tougher curbs on gold sales by central banks. At 1311 GMT, gold was quoted at $292.50/93.00 per ounce, down from Tuesday nights New York close of $294.70/95.20. The national central banks (NCBs) already pool 20 percent of their gold and dollar reserves with the ECB in order to back up the European Monetary System. In return they receive official Ecus on their balance sheets. These quarterly Ecu swaps will continue until the end of 1998, central bankers have said. In answer to a question, Duisenberg said the valuation of gold and other reserves to be transferred to the ECB would be determined later in the year, meaning the exact tonnage of gold to be pooled in Frankfurt cannot yet be estimated. Duisenberg said the ECB guideline on assets remaining with the NCBs would be issued under Article 31 of the ESCB statutes. That article obliges NCBs to seek prior approval from the ECB for reserve operations above an undefined ''certain limit...in order to ensure consistency with the exchange rate and monetary policies of the Community.'' Before announcing that national reserves would be brought under ECB control, Duisenberg said: ''I should stress that the decision on the percentage of gold to be transferred to the ECB will have no implications for the consolidated gold holdings of the European System of Central Banks.'' It was not immediately clear what that statement meant HUH????:-) but the ESCB also extends to central banks outside the euro zone. NCBs from countries not taking part in EMU are exempted from the obligation to pool their assets in Frankfurt, explaining why the 39.5 billion euros announced on Wednesday is below the 50 billion euros level set out in the Maastricht treaty. ((Frankfurt Newsroom +49 69 756525, frankfurt.newsroom+reuters.com)) Copyright 1998 Reuters Limited.