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

To: long-gone who wrote (33677)	5/12/1999 6:15:00 PM
From: goldsnow	Read Replies (1) \| Respond to of 116790

Central bank gold threat overdone -Paribas analyst 09:14 a.m. May 11, 1999 Eastern By Anshuman Daga BOMBAY, May 11 (Reuters) - The bullion market should set aside fears that other major central banks will follow Britain's surprise decision to sell over half its gold reserves, a senior mining analyst said on Tuesday. ''The British are bad sellers of gold and they have got their timing wrong,'' said Michael Coulson, head of global mining research for Paribas. ''The big boys are not influenced by what the United Kingdom does,'' Coulson told Reuters in an interview. Friday's announcement by Britain prompted a round of statements by other governments, including the United States and Italy, that no sales of their gold reserves were imminent. Only last month Switzerland voted to go off the gold standard, opening the door to the eventual sale of up to half of the country's 2,600 tonnes of gold reserves. Gold prices had been showing signs of recovery after bearish pressure from planned IMF and Swiss central bank sales. But the price has tumbled by about $15 since the British news. ''The most likely reason the Brits sold is euro requirements. The European Central Bank has a gold element in its reserves,'' Coulson said during a business visit to India. The U.K. Treasury said it would cut its gold reserves to 300 tonnes from 715 tonnes, starting with a series of auctions to sell 125 tonnes during 1999/2000. The Bank of England will replace the gold in its reserves with the euro, dollar and yen. Spot gold on Tuesday was quoted at $278.50/$278.90 per ounce after closing at a life-of-contract low on the active COMEX instrument and challenging key support at $277 on a spot basis. Coulson stuck by Paribas's bullish outlook for gold, saying the market should overcome the present spell of bad news and reap substantial gains in the medium term. ''We have got our neck very firmly on the block. I think that we could still see some significant upside.'' ''At current levels, there is substantial demand for gold and one of the important factors is the improvement in economic outlook in the Far East.'' ''This means that last year's selling of gold by individual citizens in Thailand and South Korea is now complete.'' Coulson listed gold demand from India, where rural demand had been boosted by good harvests, and the upward potential for consumption in China among the key pillars of support for the battered metal. India's love of gold appeared to be enduring beyond the rural sector, he said. ''Even in the upper and middle classes where there is sophistication in financial dealing and people are perfectly happy to hold stocks, bonds and real esate, there does not seem to be any evidence that the cultural link with gold has been broken.'' ''I see Indian consumption rising while the price remains low,'' Coulson said. India is the world's largest gold consumer and spent more importing the metal than it did on oil imports last year. Its offical imports in calendar 1998 were 614 tonnes worth $5.8 billion, according to World Gold Council data, but unofficial imports would add another 10 percent to the bill. Copyright 1999 Reuters Limited.