ALAN FINLAY, Johannesburg | Monday 2.30pm.
A BULLISH gold price was jolted slightly on Tuesday, after the Bank of England’s sale of 25 tons of the yellow metal at a price of $275,25 an ounce.
Bullion was trading below the sale price by late afternoon, having shaved off the gains it made ahead of the auction, when it was seen trading around the $276 mark.
By 4.15pm it had fallen to $274,35 an ounce, up US35c on Monday.
Gold counters on the JSE reacted positively to the auction, finishing 1,01% or 9 points up. Resources also performed well, ending the day up 1,29% or 63 points.
The overall finished 0,41% or 29 points good, with financials 0,88% or 76 points up. Only industrials took a few blows, loosing 0,63% or 50 points.
The rand continued to inch better against major currencies, and by late afternoon was trading at R7,05 to the dollar and R10,41 to the pound.
Tuesday’s gold sale follows Monday’s auction by Switzerland’s central bank of 8,9 tons of gold, bringing its total since sales started at the beginning of May to 15,4 tons.
Britain auctioned off 125 tons of gold during its last fiscal year and plans the sale of 150 tons this year.
Traders said sentiment was positive ahead of the Bank of England auction, however many discounted fresh interest in bullion ahead of the sale. In London dealers predicted that the auction would have little effect on international markets.
George Milling-Stanley, a senior gold analyst at the World Gold Council, said on Monday planned sales of gold reserves by central banks, amongst them those of Switzerland, Netherlands and Austria, will not shock the market. Milling-Stanley said that Britain’s sale has already been factored into the gold price.
However he has criticized the country’s sales procedure which he calls “disruptive bimonthly auctions.”
The World Gold Council also said on Monday that global demand for gold rose slightly in the first quarter of the year, despite a dramatic decline in purchases from the US. Last year investors sought out bullion as a hedge against possible Y2K problems.
The council said the demand for gold — mainly for jewellery — amounted to just over 795 metric tons from January to March, up from the almost 788 tons the year before.