OWN CORRESPONDENT, Johannesburg | Friday 2.50pm.
THE price of gold plunged to the lowest level since last September on Friday as gloomy sentiment surrounding the precious metal was deepened by the global trend towards higher interest rates.
Early on Friday, the spot price of gold fell to $270,05 an ounce, the lowest level since September 24 — just before an announcement by 15 European central banks of a five-year moratorium on further official sales and lending.
By midday, the price had recovered to $271,10 dollars.
GNI Research said in its daily note that fund-selling pushed gold down, adding that another negative factor is the global tendency towards higher interest rates. However, it said a slight weakening in dollar strength could be “slightly supportive” of gold.
Earlier this week, the Bank of England’s latest auction further undermined confidence in the precious metal. On Tuesday, the Bank of England held its sixth bullion auction since July, selling off anther lot of 25 tons of gold at a price of $275,25 dollars an ounce.
Prices stabilised after initial losses of almost one dollar after the bank said that the sale had been over-subscribed by a factor of 2,7, lower than a factor of three seen at the last auction in March.
The bank has been a leading cause of price volatility since it announced in May 1999 that it plans to sell progressively a total of 415 tons of its 715-ton gold stockpile.
The British government has decided to hold instead higher-return assets, notably currencies. — AFP