ALAN FINLAY, Johannesburg | Monday 2.30pm.
INTERNATIONAL gold prices were 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 in its sixth bullion auction since July.
The gold spot price fell to $275,50 from $276,15 an ounce shortly after the central bank sale. However it quickly recovered and at 2pm was trading $2 up on Monday at $276.
By mid-afternoon gold shares continued their morning run on the local bourse and were trading 1,09% or 10 points up, while resources were 1,48% or 72 points in positive territory. The all-share was up 0,86% or 62 points.
Britain auctioned off 125 tons of gold during its last fiscal year and plans the sale of 150 tons this year.
Tuesday’s 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.
Traders said sentiment was positive ahead of the Bank of England auction, but they warn of the likelihood of some profit-taking later on in the day following a weaker US bourse overnight.
In London dealers predicted that the auction would have little effect on interntational 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.