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

To: Bob Dobbs who wrote (33507)	5/8/1999 7:51:00 PM
From: goldsnow	Respond to of 116764

FOCUS-Gold price halts slide but outlook weak 10:53 a.m. May 07, 1999 Eastern By Marius Bosch LONDON, May 7 (Reuters) - Bullion prices recovered slightly in late European trade on Friday after tumbling on news of Britain's plans to sell more than half its gold reserves. But dealers said the outlook for the battered gold price remained weak. Spot gold was last quoted at $282.20/$282.70 a troy ounce, off the day's low of $279.70, which represented a $10.15 fall from Thursday's close in New York. The surprise announcement by the U.K. Treasury saw gold fall sharply in European trading, and the price continued to drop when U.S. traders sold futures on New York's COMEX exchange in reaction to the British sales plan. Traders said many market players were caught short as the gold price fell further, sparking a bout of short covering which lifted gold off the lows. ''A lot of traders would have been getting short on the back of this...I think maybe we can get a small bounce here but any decent-sized bounces are going to be sold into,'' a dealer said. Dealers said gold could see good buying below $280.00, which might lend some support to the market. The UK Treasury said it would cut its gold reserves to 300 tonnes from the present 715 tonnes. Sales of 125 tonnes in 1999-2000 would be through auctions conducted by the Bank of England in parcels of 25 tonnes, or 800,000 ounces. The Treasury said the gold holdings would be replaced by currency assets. Gold options volatilities -- an indicator of market sentiment -- surged after the Treasury announcement. ''The option market has gone a little crazy on this, options volatilities are a lot higher today than what they were yesterday across the curve,'' a dealer said. One-month gold option volatility was around 11.5 to 12 percent on Friday, compared with 8.5 percent on Thursday. Analysts said the decision by Britain to sell more than half its gold reserves was a massive blow to the metal. ''The ultra-negative view, which is justifiable, is that the British are looking to sell before everybody else does,'' said Kamal Naqvi, metals analyst for Macquarie Equities in London. Dealers said they expected gold to continue to weaken in the wake of the British gold sales plan. ''I think it is hugely significant, I think gold should continue this move a lot lower over the coming weeks but maybe for now we are locked in above $280.00,'' a dealer said. Silver recovered from a low of $5.21 a troy ounce after falling with gold. It was last quoted unchanged from the New York close at $5.37/$5.39. Platinum and palladium ignored the fall in the bullion price. Platinum was last quoted at $355.50/$357.50, just down from the $356.70/$358.70 previous New York close while palladium was firmer at $328.00/$333.00 against $311.45/$316.45. ((London newsroom +44 171 542 8065, fax +44 171 542 8077. london.commodities.desk+reuters.com)) Copyright 1999 Reuters Limited. All rights reserved.