GOLD FUTURES HIT 12-YEAR LOW; LOANS, SALE OF METAL FEARED.Byline: Bloomberg News Gold futures plunged to a 12-1/2-year low amid persistent concern that central banks will lend more gold, increasing supply at a time of slack demand and raising speculation that outright sales could follow. Confirmation this week from Germany's Bundesbank Bundesbank Refers to the central bank of Germany. This is the U.S. equivalent of the Federal Reserve.Notes: The Bundesbank was in charge of the German deutsche mark but now that the country has adopted the euro, it is part of the European system of central banking. See also: Central Bank, Federal Reserve Bank, Monetary Policy that it has been lending some of its 3,700 metric tons of gold reserves followed recent announcements by Switzerland that it may sell almost a third of its reserves, some 800 tons. In July, the Reserve Bank of Australia said it sold more than two-thirds of its gold reserves. ``Gold is a washout,'' said Jeffrey Ralph, a trader at Royal Bank in Toronto. ``The drop hasn't been long in coming because of the Bundesbank news on top of the Swiss sale plan.'' The drop in gold prices was exacerbated by Friday's expiration of December gold options. As prices fell closer to $300 an ounce, the value of ``put'' options with a price of $300 an ounce rose, forcing the option sellers to hedge their positions by selling futures contracts. That accelerated the decline in futures, traders said. |
|
||||||||||||||||||
Printer friendly
Cite/link
Email
Feedback
Reader Opinion