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Market Savvy | SAVVY CONFIDENTIAL / A Briefing for
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Gold Futures Sink to Near 20-Year Low

May 11, 1999|Bloomberg News

The "precious" is rapidly coming out of the "precious metal" definition of gold.

The beleaguered metal's price tumbled Monday to close near a 20-year low, as speculators continued to react to the latest news of government gold sales.

"Gold is doomed" and prices probably will fall further, said Tony Caen, senior metals trader at Credit Lyonnais Rouse USA Ltd. in New York.

Gold futures for June delivery slid $5.30, or 1.9%, to $277.60 an ounce on the Comex division of the New York Mercantile Exchange.

The price is nearing the 20-year low of $271.60 reached in August.

Britain said Friday it will start auctioning 415 metric tons of gold in July, investing the proceeds in government bonds.

Other nations may try to sell before then to avoid even lower prices, analysts said.

Britain will join Australia and Canada as countries that have shed gold to buy assets with better returns. In so doing, the countries are weaning themselves from a precious metal that has been the basis of the world's monetary system for most of the last two centuries.

"This is a bailout," said Dinsa Mehta, global head of commodity risks at Chase Manhattan Bank in New York. "The auction process encourages a probe to the lowest possible price."

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