|
|
|
Last Updated: Sep 25th, 2006 - 11:36:04 |
Gold at 18-year High After Russia Pledges to Pile in
By Ambrose Evans-Pritchard
The Telegraph, London
Friday, November 18, 2005
Gold surged to an 18-year high of $486.10 an ounce yesterday as
funds jumped on the bandwagon after Russia's central bank proposed
doubling its bullion reserves.
Strong economic data from the US and China boosted metals across the
board, pushing copper to an all-time high of $1.950 a pound.
Platinum briefly penetrated $1,000 an ounce for the first time in 26
years before falling back.
FS Futures said there was a scramble by gold traders with
big "short" positions to cover their losses after the metal burst
through technical resistance near $480, causing a sudden price
spike. Chartists say there is now "open air" until the $510 area.
Although Russia announced its gold move on Wednesday, investors are
only now waking up the full significance. Maria Guegina, head of
reserves management, said Russia wished to double the gold share of
its fast-growing reserves from 5 to 10 percent.
This would amount to a purchase of 500 tonnes, equal to the combined
allowable sales by a group of major central banks under the
Washington accord. It would also absorb all of Russia's gold
production for three years.
South Africa's central bank governor, Tito Mboweni, said this week
his bank may now start accumulating gold once more after a period of
selling.
Central bank sales -- led by Gordon Brown's auction of half
Britain's gold near the bottom of the market -- have been a major
cap on prices in recent years. But Mr Mboweni said global central
banks were now becoming net buyers.
The German Bundesbank has shot down plans by the new government to
sell off gold reserves to cover spending, saying it was a decision
for the bank alone.
Veteran gold analysts Mary Anne and Pamela Aden say fears of
inflation underpin the gold rally. US producer prices are up 8.4
percent in a year, and 22.8 percent on an annualised basis over the
past two months.
"Gold has always led inflation and interest rates, and it's
happening this time too. The rises in inflation have been
intensifying lately because worldwide monetary policies have been
loose," they said.
Robert Longe, president of Kimber Resources of Vancouver, said
miners had not been finding enough gold for years to meet global
demand.
But the deeper reason for the rally, he said, was that "central
banks have been printing money, and it is causing investors to lose
faith in paper currencies, especially in the US dollar."
Top of Page
|
|
|
|
|
