OWN CORRESPONDENT, Johannesburg | Wednesday 1.00pm.
THE gold market has lost touch with reality due to speculation that most central banks are set to sell their gold reserves, Nicky Oppenheimer, chairman of South African mining house Anglogold, said on Wednesday.
Present price levels, Oppenheimer said in his report for the company’s second quarter performance, are “frustrating” because there is strong growth in physical demand in the quarter. “This paradox of healthy and growing physical demand juxtaposed with aggressive short selling in the derivatives market reinforces the extent to which the current gold market has lost touch with reality,” Oppenheimer said in a statement.
“Speculators … are encouraged to sell the metal on the as yet unproved speculation of imminent, widespread and ongoing central bank gold sales,” he said.
Oppenheimer called for “some perspective…to be brought to the debate on the future gold management policies of central banks and other official institutions.”
Anglogold, the world’s largest gold producer, reported an attributable profit of R1,016-billion for the June quarter, 66% more than the figure for the March quarter. Headline earnings for Anglogold, which was listed on the London Stock Exchange in May, were down in the quarter to 519 cents from 974 cents in March.
Physical demand in South Korea and South-East Asia has risen by 50% from the figure for the same quarter last year, while gold imports into Japan have risen by 80%. Demand in the US is up by 17% and gold imports into India increased marginally.
Oppenheimer blamed the United Kingdom’s announcement in May that it is to sell 415 tonnes of its official gold reserves for the drop in the average spot gold price in quarter — from $287 an ounce in the first quarter to $273.