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

To: Bearcatbob who wrote (33502)	5/8/1999 2:39:00 PM
From: Bexar	Respond to of 116972

05/07 17:45 FOCUS-North American gold stocks dive on U.K. sale By Sarah Edmonds TORONTO, May 7 (Reuters) - The value of North American gold stocks dropped with a thud on Friday on news the British Treasury will sell more than half its gold reserves, crushing budding optimism that the gold sector was reviving. The revelation that all but 300 tonnes of the British treasury's 715-tonne reserve would be sold in the medium term -- with 125 tonnes slated for sale this financial year -- stopped a month-long gold rally in its tracks and sent prices skidding in London and New York. Gold had been regaining a little of its lost luster in recent sessions as North American inflation fears crept into financial markets. In a move widely criticized by gold companies and lobby groups, the Treasury said the gold holdings would be replaced by holdings of the world's leading currencies. "We thought we were reaching a point in the gold market where a lot of the bad news was already in the price," said Kelvin Williams, an executive director with AngloGold <ANGL.J>, the world's top gold producer. Although commodity and stock traders were quick to say the amount of gold slated for sale was not huge, share prices suffered a sharp reversal. Adding to the negative mood was a U.S. jobs report that appeared to ease inflation jitters. The Labor Department reported that 234,000 new jobs were created in April and the unemployment rate rose to 4.3 percent. Gold is often bought as an inflation hedge. Gold's sell-off landed hard on the resource-heavy Toronto stock market, where the precious metals subindex closed down a hefty 711.50 points, or 10.87 percent, at 5834.34. It climbed back slightly from its nadir for the session of 5790.57. U.S. shares were hammered as well. The Philadelphia Stock Exchange gold option index dropped 10.58 points, or 12.80 percent, to close at 72.05. Wall Street brokerages were quick to revise their outlook for gold stocks. Goldman Sachs gold analyst Daniel McConvey downgraded the gold sector to underweight from market weight after the news from Britain. "I downgraded all the stocks in the sector," McConvey added in a telephone interview from New York. "This news was unexpected." Morgan Stanley also cut its ratings on several gold producers. London spot gold was quoted at the end of the day at $282.20/$282.70 a troy ounce, off the day's low of $279.70 but still $7 below Thursday's New York close. Although London gold prices had recovered slightly from their initial $10 slide by the close, traders there said the outlook for the price remains bleak. In the initial sell-off, Comex June gold hit a low of $280.30, its weakest level since April 6, a stone's throw from the contract low of $279.40, set April 5. It then clawed back and closed at $283.70, down $7. Spot gold was trading at $282.50/$283.00 in New York, slightly firmer than the London close. While the British news was thought by some to foreshadow further selling by other central banks, the U.S. Treasury said it had no plans to dump any of its reserves. Other countries have shed some of their gold stockpiles in recent months and Switzerland last month voted to go off the gold standard, which may lead to it ultimately selling up to half its 2,600-tonne reserve. Trader Rolie Bradley, at Maison Placements Canada Inc. in Toronto, said he believes that while the British sale news was something of a surprise, gold's lack of popularity with industrialized nations' governments and central banks has been long factored into the market. "All this is in the market," Bradley said. "It's a blow but I think you may find that the price of gold may actually come back to where it was in a few days, primarily because we're starting to get a little antsy about the possibility of rising inflation in North America." The stock North America's largest gold producer, Newmont Mining Corp. <NEM.N>, tumbled $3.44 to $22.69. Shares in heavyweight Barrick Gold Corp. <ABX.TO>, North America's second-largest gold producer, finished down C$3.90, or 11.54 percent, to C$29.90 in Toronto. In New York, Barrick finished off $2.75 at $20.50. Canada's second-biggest miner, Placer Dome Inc. <PDG.TO>, fell C$3.25, or 14.38 percent, to C$19.35 in Toronto and $2.44 to $13.19 in New York. ($1=$1.46 Canadian) ((Sarah Edmonds, Reuters Toronto Bureau 416-941-8100 e-mail toronto.newsroom@reuters.com))