OWN CORRESPONDENT, London | Thursday 5.00pm
GOLD prices fell to a new 20-year low point early on Thursday in a continuing downward movement prompted last month when Britain unveiled plans to sell off more than half its gold stocks.
The morning fix on the London bullion market gave a gold price of $263,85 an ounce from $267,00 at the close of trade on Wednesday. Not since mid-May, 1979 has the gold price been so low. The latest bout of selling came in continuing reaction to an announcement from the Bank of England (BOE) that it plans to dispose of 415 tons of gold — more than half of its stocks — starting in July.
Analysts have noted that the outlook for gold deteriorated further with the indication from United States monetary authorities late last month that another interest rate interest could be in the pipeline, which might increase the returns from currency investments.
Since the British announcement on May 7, analysts have openly wondered whether gold has become an outdated asset.
Britain said it would channel the proceeds from its gold sales into euros, dollars and yen, which offer greater investment flexibility and hence potential for returns.
And Britain is not alone. The Swiss authorities have already vowed to break the link between gold and the Swiss franc and plan to sell some gold to raise funds to compensate Nazi victims.
The International Monetary Fund meanwhile has signalled that it could sell between five and 10% of its gold reserves to finance debt reduction of poor countries. –AFP