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Welcome to The Week in Gold! (2000 Archive) Through the courtesy of the World Gold Council we are pleased to offer the Weekly Gold Market Commentary assembled from their worldwide staff's observations of the significant events that shaped each week's gold market. (View Commentary for Current Year)

2000 WEEKLY GOLD MARKET COMMENTARY

(December 11 - December 15, 2000)

Gold started the week little changed, fixing at $272.50 in London on Monday morning, but soon went on the defensive as fund selling in New York quickly put downward pressure upon prices. At the same time the view that the protracted US Presidential election was close to resolution served to support the dollar, and as the euro slipped, so gold weakened in sympathy, falling to $270.70 later that day. Quotations steadied a little on Tuesday helped by a slight upturn in the euro and held above $270, but fund selling returned on the next day and gold slid towards $268 before uncovering fresh support.

On Thursday the market held nervously above $269; a further recovery in the euro seemed to have little impact, the market focussing a little more upon the retreat of oil prices below $30, while the fall of silver to contract lows on Comex also tended to undermine confidence in gold. Although silver continued to fall on Friday gold belatedly began to react to the weakening dollar, recovering to $270.30 at the AM fix in London. Activity was beginning to fall away at the approach of the holiday season and gold traded narrowly over the rest of the day, ending the week in New York at $270.65/271.15.

The commitment of traders report as published by the Commodity Futures Trading Commission showed further short-covering taking place on Comex during the week ended December 12, where the net short position of the large speculators fell from 26,921 contracts (equivalent to 83.7 tonnes) to 17,942 contracts (55.8 tonnes). Since then open interest on Comex has risen from 110,455 contracts to 113,626 contracts, confirming that fresh speculative short selling has been a feature over the past few days. Gold lease rates barely moved over the week, the one-month rate held unchanged at 0.65875% while the 12-month rate eased slightly from 1.27% to 1.25%.

At the US District Court in Boston, supported by the Gold Anti Trust Action Committee (GATA), a lawsuit was filed accusing the Bank for International Settlements, officials from the US Treasury Department and the US Federal Reserve as well as five investment houses of conspiring to suppress the price of gold. The lawsuit also alleges price fixing, securities fraud and breach of fiduciary duty.

This is the last Gold Market Commentary for 2000; we wish all our readers an enjoyable holiday season. The next commentary will be published in the week beginning January 8, 2001.

Prior Week Archive: (December 4 - December 8, 2000)

The week opened on a stronger note for gold as the extension of the previous week's rally in the euro lent continued support. The Australian dollar was also making gains, rising to a two-month high against the US dollar, and gold responded by breaking through overhead resistance at the $270 level and firming to a fixing of $271.15 in London on Monday morning. Platinum and palladium, which were enjoying vigorous rallies, also encouraged buying in gold and short-covering in New York kept gold on an upward track. By Tuesday morning the euro was easing back a little as profit-taking set in, but gold held mostly steady fixing at $271.85. Overhead resistance at the $272 level was proving difficult to overcome, however, and gold later slipped below $271.

Renewed dollar weakness and falling stock markets sparked another bout of short-covering in gold in New York Wednesday with gold penetrating $272 and running up to $273.50. Buying continued overnight in Asia and gold rose further, reaching $275.10 at the AM fix on Thursday. Attempts to break above $276 failed however, and as the market cooled so quotations eased back from the highs. On Friday the US Labor report was released, showing higher unemployment and lower payrolls; this raised expectations that the Federal Reserve will soon move to trim interest rates in order to boost economic growth and both stock markets and the dollar firmed. Gold consequently relinquished further ground, closing the week in New York at $272.50/$273.

The Commodity Futures Trading Commission's commitment of traders report for the week ended December 5 showed further short-covering taking place on Comex over this period, with the net short position of the large speculators falling from 36,201 contracts (equivalent to 112.6 tonnes) to 26,921 contracts (83.7 tonnes). In line with this development, open interest fell back to 113,455 contracts by this point and has since eased further to 112,387 contracts, indicating that additional short-covering has occurred more recently. Short-term gold lease rates were unchanged over the week with the one-month rate remaining static at 0.65875%; longer-term rates firmed, although they still remain historically low; the 12-month rate moved up from 1.12% to 1.27%.

Gold imports into Turkey between January and November this year have surged, leaping by 94% over the same period of 1999 to 202.15 tonnes. Gold imports in November amounted to 16.45 tonnes compared with 6.50 tonnes in November, 1999. In Taiwan the Finance Ministry has released figures showing the imports of gold bars and coins up 24% during the first 11 months of the year to 95.941 tonnes, with imports for November jumping by 318% to 21.446 tonnes compared with 5.136 tonnes in November 1999.

In Russia Mikhail Zidornov, the deputy chairman of the State Duma committee on budget and taxes, stated that in 2001 the Russian Central Bank will seek to prevent the rouble's official exchange rate from rising and will continue to build its official reserves by buying hard currency and accumulating gold from domestic production. In the Balkans, meanwhile, the former members of the Yugoslav federation are seeking to reach agreement on the division of gold reserves, amounting to 46 tonnes, which are held with the Bank for International Settlements. The rump Yugoslavia (Serbia and Montenegro) had previously blocked any attempt to divide the gold assets, but the fall from power of Slobodan Milosevic has resulted in a change of policy and it is hoped that a formula will be speedily agreed so that Croatia, Bosnia, Slovenia and Macedonia receive a share.

Prior Week Archive: (November 27 - December 1, 2000)

The market opened firmly in the wake of the US Thanksgiving holiday, fixing slightly higher at $266.20 in London on Monday morning. Good physical demand was seen as continuing to underpin prices, while uncertainty over the future direction of the US dollar, weaker stock markets, the existence of a large short position in gold on Comex and recent strong gains in US gold stocks were also perceived as positive for gold's immediate outlook. Some short-covering began to emerge soon after the US markets reopened on the view that the market was oversold, lifting quotations to $268.15 by the afternoon fix. The dollar came under increasing pressure as the day progressed, and its fall against the euro and Australian dollar in particular lent further impetus to gold's upswing, so that the $270 level was touched briefly during late trading. Prices remained firm Tuesday with gold fixing at $269.75 in the morning. The recovery of the euro to above 85 cents was positive for gold, but market activity was more subdued and gold could not generate enough new momentum to break still higher.

Wednesday saw prices start to weaken again amid quiet trading conditions, with most activity in New York related to switching ahead of first notices for the December Comex contract. A sudden downward correction in the euro caused a sympathetic drop in gold late in the day, and by Thursday morning gold had fallen to $267.00 in London. The release of US economic statistics showing a fall in US personal income as well as a sharp reduction in spending put renewed pressure on the dollar, however, and with the euro suddenly rallying so gold also bounced, recovering the $269 level. Short covering lent additional strength to gold and Friday morning gold surged up to a six-week high of $273.05. Professional selling after the US opening held the move in check, however, and although the euro continued to improve on foreign exchanges, gold eased back nervously to close the week in new York at $269.40/269.90.

The commitment of traders report for the week ending November 28 as published by the Commodity Futures Trading Commission showed short covering starting to take hold on Comex, where the net short position of the large speculators dropped from 46,456 contracts (equivalent to 144.5 tonnes) to 36,201 contracts (112.6 tonnes). Since then open interest has fallen back from 124,950 contracts to 115,940 contracts, indicating that further short covering has occurred in recent days. As liquidity tightened gold lease rates for nearby maturities jumped over the week, the one-month rate rising from 0.41875% to 0.65875%; the 12-month rate hardly moved, however, firming only marginally from 1.11% to 1.12%.

Prior Week Archive: (November 20 - November 24, 2000)

It was another quiet week for the gold market, with trading conditions further subdued by the Thanksgiving holiday in the US. Prices opened the week virtually unchanged, with gold fixing at $265.75 in London on Monday morning. Signs of improved physical demand helped the market firm a little after the New York opening, and with the euro steadying and stock markets retreating, gold moved above the $266 level. Although the Australian dollar fell to new lows early Tuesday morning, gold remained well supported, running up to $267.25 at the AM fix. A recovery in the US dollar checked the upturn at this point, however, and quotations drifted gradually back towards $266 over the rest of the day.

Activity fell away on Wednesday as the long Thanksgiving holiday approached, and traders proved reluctant to assume new positions. The large short position on Comex continued to support prices, with many market participants anticipating a short-covering rally in the near future. Weak producer currencies were a worry to the market, but rumours of possible currency intervention by the Australian central bank eased concerns and gold held above $266 throughout the day. With the US market closed, trading was very slack over the rest of the week. Gold tended to drift sideways, with prices ranging either side of $266, and closed in London on Friday exactly in line with this trend at $265.70/266.20.

The Commodity Futures Trading Commission's commitment of traders report for the week ended November 21 showed a further increase in speculative short-selling taking place. As a result, the net short position of the large speculators on Comex rose from 44,976 contracts (equivalent to 139.9 tonnes) to 46,456 contracts (144.5 tonnes). Since then, open interest has eased back from 132,633 contracts to 129,773 contracts, suggesting that some short-covering may have occurred. Gold lease rates showed little change over the week, the one-month rate firming slightly to 0.41875% and the 12-month rate easing a little to 1.11%.

Prior Week Archive: (November 13 - November 17, 2000)

The week started steadily for gold with prices still closely contained within a narrow trading range. Gold was fixed little changed at $264.30 in London Monday morning; the influence of currency markets on prices appeared to have faded somewhat, but traders were still cautious in case of any major change in exchange rates and uncertain over the US election and volatility in equities. Quotations firmed to $265 after the US opening but then drifted down again in sympathy with weak silver prices later in the day. Tuesday saw gold remain rangebound, supported at $264 but meeting resistance at the $265 level.

Light buying interest in Asia helped gold firm slightly to a fix of $265.25 Wednesday morning. A downturn in the euro undermined this move in the afternoon, however, and prices slipped back within the previous trading range. The firmer tone was revived Thursday and short-covering lifted gold briefly above $267 in the afternoon. Professional selling quickly checked the rally and gold subsequently retreated to $265.50 in New York. Further short-covering took place in Tokyo Friday morning, helping gold up to a fix of $266.50. Activity fell away as the day progressed, however, and after fixing at $265.25 that afternoon gold steadied slightly to end the week at $265.55/266.05.

The latest Commitment of Traders Report published by the Commodity Futures Trading Commission showed another jump in speculative short selling taking place during the week ended November 14, with the net short position of the large speculators on Comex surging from 34,120 contracts (equivalent to 106.1 tonnes) to 44,976 contracts (139.9 tonnes). Open interest, which had risen to 140,258 contracts by this point, has since eased back again to 137,021 contracts, suggesting that some short covering may have occurred over the last few days. Gold lease rates continued to drift lower over the week, with the one-month rate slipping to 0.39875% and the 12-month rate to 1.13%.

Reports from China say that the government has embarked upon a major crackdown on the illegal import of precious metals through Hong Kong into the special economic zone of Shenzhen, the largest importing area in the country for gold and platinum. Operations in the area's jewellery manufacturing sector have apparently been disrupted, undermining market sentiment, and locals fear that supplies may run at reduced levels over the remainder of the year.

Prior Week Archive: (November 6 - November 10, 2000)

Gold prices traded narrowly within a well-worn path over the week, hardly reacting to outside events. The week opened very quietly ahead of the UK gold auction with traders tending to mark time and just watch currency market movements for price direction. Gold was fixed slightly higher at $265.75 Monday morning, reflecting the stronger euro, and barely moved over the day, only dropping below $265 late in New York as some light selling arose. Gold held at the lower levels Tuesday morning and fixed at $264.10 before last bids for the auction were placed. In the event the Bank of England sold the allotted 25 tonnes of gold 20 cents higher, at $264.30 an ounce, in an auction covered 3.3 times by bids which was better than the previous four auctions. Some modestly aggressive buying lifted prices following this result, but after running up to $266 gold soon ran out of impetus, easing back to $265.50 by the PM fix and below $265 by the US close.

Wednesday saw attention focussed upon the US Presidential elections, the outcome of which it soon became clear would depend upon a recount in Florida. Gold hardly moved, suspended between $264 and $265 throughout the day. ECB intervention in support of the euro was again evident Thursday and helped underpin gold at $264, while the dollar appeared a little vulnerable due to the unclear election situation. Gold was fixed at $265.15 Friday morning, but then drifted slightly lower as the dollar regained some ground, ending the week at $264.85.

Commodity Futures Trading Commission figures covering the week ended November 7 showed modest short selling continuing, with the net short position of the large speculators on Comex increasing from 31,722 contracts (equivalent to 98.7 tonnes) to 34,120 contracts (106.1 tonnes). Open interest, which had risen to 138,300 contracts by this point, has shown little change since in the prevailing quiet market conditions. Gold lease rates eased lower over the week, the one-month rate drifting down to 0.43875% and the 12-month rate to 1.15%.

The continued fall in gold market trading activity was reflected in the latest statistics published by the London Bullion Market Association, which showed the net clearing of gold declining once more during October. The daily average of ounces transferred fell by 10.5% from the previous month to a new low of 18.9 million ounces (588 tonnes); in October 1999 the daily average of ounces transferred, at 37.3 million ounces (1,157 tonnes), was almost double this figure.

Prior Week Archive: (October 30 - November 3, 2000)

Gold started the week steadily, gaining support from both a stronger euro and physical demand, but the market remained nervous and still prone to currency related moves. The AM fix in London Monday was $263.80 and as the dollar softened, gold so gold firmed, improving to $264.50 by the PM fix. Comex was fairly quiet with many traders committed to entertaining clients ahead of the Comex annual dinner, and prices held steady during the New York session. Further dollar weakness in the Far East then gave another boost to gold, which rose to $266.00 at the Tuesday morning fix. A tumble in the Australian dollar to new lows then checked the rally, however, as the possibility of increased producer hedging raised a note of caution among traders.

Wednesday saw prices holding around the $265 level with price fluctuations remaining small. The euro maintained its stronger tone against the dollar, lending support to gold, but some late fund selling in New York pushed gold back towards $264. A bounce in the Australian dollar encouraged renewed buying in Asia on Thursday morning, lifting quotations to $266.45 at the AM fix. The release of US economic data showing a large increase in third quarter productivity served to boost the dollar later in the day, however, and gold retreated to $264.50 before uncovering fresh support. The market quietened again Friday as traders prepared for the UK gold auction on November 7. The European Central Bank's solo intervention on foreign exchanges put temporary downward pressure on the dollar, and gold firmed to $265.75 at the AM fix. The dollar made up much of its lost ground later in the day, however, and gold eased back to end the week at $264.90/$265.40.

The latest statistics published by the Commodity Futures Trading Commission show a large jump in speculative short selling taking place during the week ended October 31, with the net short position of the large speculators on Comex soaring from 18,571 contracts (equivalent to 57.8 tonnes) to 31,722 contracts (98.7 tonnes). Open interest had risen to 137,318 contracts by this point, but has since held fairly steady, suggesting that speculators were prepared to take positions well ahead of the UK gold auction. Gold lease rates remained firmer over the week, the one-month rate moving up slightly from 1.47875% to 1.49875% and the 12-month rate holding barely changed at 1.27%.

Prior Week Archive: (October 23 - October 27, 2000)

Gold started the week on a slightly stronger note, benefiting from an easing in the US dollar from its recent highs against the euro as well as increased violence in the Middle East over the weekend. After fixing at $271.25 in London Monday morning activity fell away, however, and prices traded steadily if nervously until the next morning, when gold was fixed lower at $270.40. London traders were quoted at this time as reporting that the only interest being shown in gold was concentrated at the fixes, with little activity at other times.

Although quotations remained steady initially, holding above $270 until Wednesday, a combination of the weak euro, which fell below 83 cents, and strong and persistent selling from one London trader caused the $270 support level to crumble. Gold was fixed lower, at $269.40 that morning, and continued to slide on determined selling to below $267 by the New York opening. Fund selling then arose, keeping the downward pressure on gold despite the emergence of some physical and bargain buying as gold moved to lower levels.

Thursday saw prices stabilise above $266 as the selling eased in volume. The closure of the Indian market for Diwali prevented a significant bounce, however, and despite a brief break down to $265 after the US opening, gold basically remained above $266 until Friday afternoon. At this point a combination of the OTC options expiry, the approach of Comex week (when many traders would be missing from their desks) and nervousness over the next UK gold auction, due on November 7, sparked another wave of selling. Gold dropped to a 14-month low PM fix of $263.80 and looked prepared to move still lower on talk of increased producer hedging; the release of US GDP data showing an unexpected slowing in the US economy during the third quarter helped the euro to suddenly strengthen however, and gold recovered a little in sympathy, ending the week at $264.30/264.80.

The latest Commitment of Traders report, published by the Commodity Futures Trading Commission, showed the net short position of the large speculators on Comex rising modestly from 16,737 contracts (equivalent to 52.1 tonnes) to 18,571 contracts, (57.8 tonnes) over the week ended October 24. Open interest had risen to 135,064 contracts at this point and has since increased to 136,977 contracts, probably indicating further short selling. Gold lease rates tightened over the week, almost certainly reflecting the continued strength of the dollar against some producer countries; the one-month rate consequently moved up from 0.43875% to 0.47875% and the 12-month rate from 1.18% to 1.28%.

Prior Week Archive: (October 16 - October 20, 2000)

Gold opened the week a little easier, fixing in London at $271.60 on Monday afternoon, after closing the previous week above $272. Trading remained quiet throughout the week, dominated by movements in currencies and stock markets.

The continued strength of the US dollar brought fresh all-time lows in the Australian dollar and the Euro in midweek, keeping gold prices under pressure, but underlying support around the $270 level continued to hold. Gold fixed at $270.25 in London on Tuesday afternoon and $272.00 on Wednesday. The price edged up in early trading in New York on Wednesday as the US stock market weakened, but softened later as equities recovered toward the close. Trading was quiet within a narrow price range on Thursday and Friday, and gold closed the week in New York at $270.20/$270.70.

The Dutch central bank announced on Tuesday that it had sold no gold the previous week. The Dutch sold 100 tonnes under the terms of the Washington Agreement on Gold in the 12 months to September, and plan to sell a further 200 tonnes before the Agreement expires in September 2004, but the central bank has given no indication of the timing of these additional sales.

The Bangladesh Bank, which is not a signatory to the Agreement, on Friday denied that it plans to sell its gold reserves. The Bank said it was considering leasing some of its gold holdings, which amount to a little over 3 tonnes.

The latest commitment of traders report, which the Commodity Futures Trading Commission is now publishing on a weekly basis, rather than bi-weekly, shows the net short position of the large speculators on Comex falling from 25,526 contracts (equivalent to 65.7 tonnes) to 16,737 contracts (52.1 tonnes) in the week ending October 17. Open interest at this point stood at 133,196 contracts, and remained little changed at the end of the week at 132,611 contracts. An easing in short-term liquidity saw the one-month gold lease rate edge down from 0.43875% to 0.41875%; longer-term rates firmed, however, the 12-month rate moving up from 1.14% to 1.18 over the week.

Prior Week Archive: (October 9 - October 13, 2000)

The week opened with gold slightly firmer, but still testing underlying support around the $270 level. Activity was subdued on Monday with the Columbus Day bank holiday in the US coinciding with Yom Kippur, so that gold traded narrowly just above $270 throughout the day. On the next day producer selling emerged during Asian trading hours, with local traders pointing to renewed Australian dollar weakness as the main cause. Prices promptly dropped below $269, but good physical support was uncovered at the lower levels and quotations gradually recovered over the day. Gold was fixed at $270.50 in London on Tuesday afternoon and continued to firm during the New York trading session with a US dollar downturn, weaker stocks and higher oil prices encouraging some short-covering.

On Wednesday morning gold was fixed at $273.00 and pressed upwards to $274 in the early afternoon as fund buying emerged in New York. Renewed dollar strength against the euro checked the move at this point, however, and the market slipped back below $271 by the Comex close. Thursday saw gold trade higher again as political tension in the Middle East suddenly escalated. News of confrontations between Israel and the Palestinians, together with the damaging of a US Navy destroyer by an explosives-laden raft off Yemen, caused stocks to fall and triggered a sharp upward move for gold, which rallied up to $277. With financial markets recovering on Friday and no further deterioration in the Arab-Israeli situation, some of the previous day's safe-haven buying was unwound. After a morning fix of $275.85, quotations eased below $274 by mid-afternoon and closed the week slightly higher at $272.40/272.90.

The latest commitment of traders report, which the Commodity Futures Trading Commission will from now on publish on a weekly basis, rather than bi-weekly, shows the net short position of the large speculators on Comex increasing from 21,111 contracts (equivalent to 65.7 tonnes) to 25,526 contracts (79.4 tonnes) in the week ending October 10. Open interest at this point stood at 134,015 contracts, and has since eased slightly to 133,196 contracts, probably reflecting fairly active short-covering, offset in part by the accumulation of new long positions. A tightening in short-term liquidity saw the one-month gold lease rate firm from 0.39875% to 0.43875%; longer-term rates continued to ease, however, the 12-month rate moving down from 1.17% to 1.14% over the week.

The latest clearing statistics released by the London Bullion Market Association show a modest 6.5% recovery in net gold clearing during September, up from the record low of an average 615 tonnes per day during the previous month to an average 656 tonnes per day. This figure is still a huge 43% down on the average 1,154 tonnes per day seen in September 1999.

Prior Week Archive: (October 2 - October 6, 2000)

Gold started the week quietly with the relative strength of the dollar against key currencies continuing to be the main influence on market prices. Gold was fixed at $274.30 in London on Monday morning but then started to drift lower as the dollar firmed against the euro. Some light fund selling emerged later in the day causing quotations to ease back towards $273. Producer selling was in evidence early Tuesday, putting further downward pressure on prices, which moved down to $272.40 at the AM fix. The Federal Open Market Committee's decision to leave US interest rates unchanged did nothing to weaken the dollar and in very dull trading conditions gold continued to weaken.

Wednesday morning saw the Australian dollar touch a record low against the US dollar as the Reserve Bank also announced no change in Australian interest rates. Producer selling was once again in evidence and gold slipped to $271.30 at the morning fix. Trade and fund selling then arose after the US opening and prices slipped below $271.The European Central Bank surprised traders by raising interest rates by 0.5% Thursday and both the euro and gold showed some initial strength. The impact of the hike in rates was soon eroded, however, and as the euro came under renewed pressure so gold dropped to $270.40 at the PM fix. Continued US dollar strength undermined prices again Friday, with strong US employment statistics compounding the situation. Support at the $270 level was tested repeatedly and gold closed the week in New York at $269.40/269.90.

The latest commitment of traders statistics shows a sharp fall in the net short position of the large speculators on Comex taking place during the two weeks ended October 3, down from 30,561 contracts (equivalent to 95.0 tonnes) to 21,111 contracts (65.7 tonnes). Open interest had fallen back to 124,815 contracts at this point, but has since increased once again to 130,373 contracts, reflecting the new short-selling that has occurred over the past few days. Gold lease rates continued to ease lower over the week, the one-month rate falling from 0.41875% to 0.39875% and the 12-month rate from 1.19% to 1.17%.

Prior Week Archive: (September 25 - September 29, 2000)

The market opened the week on a stronger note, continuing to benefit from the downturn in the dollar following the previous week's concerted central bank intervention on foreign exchanges. Gold was fixed at $273.55 in London on Monday morning, but eased below $273 after the New York opening. Further dollar weakness checked the downturn later in the day however, and a short covering rally late in New York started prices moving higher again. Tuesday saw quotations consolidating above $274 for much of the day, with currency movements the only real market feature.

Short covering ahead of the quarter-end, the Comex options expiry, a firmer euro and caution ahead of Denmark's referendum on joining the eurozone all contributed to stronger prices on Wednesday, with gold rising to $276.15 at the second fix. Prices held at the higher levels during the US session, and moved up further above $277 on Thursday morning. Exit polls from Denmark indicated that a "no" vote was likely in the referendum, and gold eased back as the dollar began to edge up against the euro. The slide continued on Friday, with a sharp rally on the New York stock market adding to the downward pressure on gold. Later in the day, the euro began to steady against the dollar once more, and gold ended the week at $273.90/$274.40.

No commitment of traders statistics were published this week. The last figures published, which covered the two weeks ended September 19, showed a sharp increase in the net short position of the large speculators on Comex, up from 18,882 contracts (equivalent to 58.7 tonnes) to 30,561 contracts (95.0 tonnes). Open interest stood at 137,565 contracts at this point and moved up to almost 144,000 contracts soon after on further speculative short-selling; the weaker tone in the dollar later reversed this trend, however, and subsequent short covering has seen open interest drop back to 123,966 contracts. Gold lease rates had run up during the previous week, but retreated as the tightness in market liquidity eased; the one-month rate slipped back from 0.61875% to 0.41875% and the 12-month rate from 1.37% to 1.19%.

On the first anniversary of the Washington Agreement on Gold, the accord that limited gold sales from the 11 eurozone countries, the European Central Bank, the UK, Switzerland and Sweden to 2,000 tonnes over five years, the ECB said it had no plans to change the terms of the Agreement. However, a spokesman did reveal that bank officials were looking into the possibility of extending the accord beyond 2004, but the bank was not prepared to make a statement at this stage.

The Swiss National Bank announced that it plans to sell a further 200 tonnes during the second year of the Agreement, which runs to the end of September 2001. The Bank for International Settlements has been tasked with selling 100 tonnes by March 2001.

Prior Week Archive: (September 18 - September 22, 2000)

Gold opened the week quietly with market activity impacted by both currency movements and the impending Bank of England gold auction. Prices initially remained within the established narrow trading range, fixing at $272.45 in London on Monday morning and edging up to the $273 level that afternoon. Market sentiment was extremely cautious, however, and in light trading conditions prices retreated below $272 later in New York. Gold was fixed at $272.00 Tuesday morning ahead of the auction, with trading levels very low. The auction results were announced at 12.15 pm London time; 25 tonnes of gold were sold at an allotment price of $270.60 with the amount on offer 2.6 times subscribed - double the 1.3 times cover seen at the previous auction, but still relatively low. Quotations promptly dropped back to the auction price but then stabilised as market sentiment took the view that the result had been broadly neutral.

The strength of the dollar then regained its influence over prices and gold traded cautiously above $271 for most of Wednesday, only to come under renewed speculative selling pressure during the New York trading session. The $270 level began to be tested and as the dollar rose to new record highs against the euro, so gold weakened, fixing at $269.65 Thursday morning. Nevertheless, gold resisted a more decisive move lower and recovered above $270 as the dollar began to ease on foreign exchanges. On Friday the news that the European Central Bank together with the US and Japan had engaged in co-ordinated intervention in support of the euro caused the dollar to drop sharply, and gold reacted positively, rallying up to $273.95 at the afternoon fix. The euro subsequently backed off from its highs, however, and gold eased back in tandem, closing the week in New York at $271.90/272.40.

Commitment of traders statistics published by the Commodity Futures Trading Commission showed the net short position of the large speculators on Comex rising once more in the two weeks ended September 19, moving up from 18,882 contracts (equivalent to 58.7 tonnes) to 30,561 contracts (95.0 tonnes). Open interest, which stood at 137,565 contracts at this point, subsequently rose to nearly 144,000 contracts on further short-selling, but then eased back on September 19 to 139,706 contracts as the weaker dollar sparked short-covering. Gold lease rates jumped over the week as market liquidity continued to tighten, the one-month rate firming from 0.36875% to 0.61875% and the 12-month rate from 1.11% to 1.37%.

Prior Week Archive: (September 11 - September 15, 2000)

Prices were contained within an even tighter trading range over the week, with low levels of market activity and dollar strength/euro weakness the main features. Gold started the week quietly and steadily, fixing at $272.60 on Monday morning. The market then traded sideways until Tuesday afternoon, when a temporary downturn in the dollar encouraged gold to run up $275. The dollar's correction quickly ran its course, however, and quotations promptly fell back to the $272-273 trading range, where they held for the next two days.

Thursday saw the Australian dollar fall to fresh all-time lows against the US currency, prompting increased producer activity during Asian trading. This action was met by supportive professional bargain-hunting, however, and quotations held within a narrow trading range. The release of US producer price and retail sales reports showed little indication of inflationary pressures and a brief spell of buying lifted gold slightly higher after the US opening. Prices quickly relinquished any gains and, after fixing at $273.10 that afternoon, quotations slipped below $273 once again. The approach of the next UK gold auction, due on September 19, then added a note of caution and caused market activity to ease back still further on Friday. Prices remained basically flat for most of the day, dropping briefly below $272 as the euro was pushed down towards record lows but recovering slightly later to close the week in New York at $272.20/272.90.

No commitment of traders statistics were published this week. The last figures reported, covering the two weeks ended September 5, showed the net short position of the large speculators on Comex dropping from 26,221 contracts (equivalent to 81.6 tonnes) to 18,882 contracts (58.7 tonnes). Since then open interest on Comex has risen from 125,443 contracts to 135,841 contracts on September 15, indicating that the speculative short position has grown once more. Gold lease rates for nearby dates continued to firm over the week with the one-month rate moving up from 0.28875% to 0.36875%; dates further out remained stable with the 12-month rate unchanged at 1.11%.

Net clearing statistics issued by the London Bullion Market Association demonstrate, once again, the depressed levels of trading activity that the gold market continues to suffer. In August the volume of gold transferred fell to another new low. The daily average of 19.8 million ounces (616 tonnes) was down 3.5 % from the previous very depressed month and down a huge 46% from the daily average 36.4 million ounces (1,132 tonnes) transferred in August 1999. The LBMA commented that the price remained trapped within an increasingly narrow range over the month, with the strongest influence on gold appearing to be movements in the US dollar.

The planned merger of Chase Manhattan and J. P. Morgan, both active bullion banks, means that the gold market is set to lose another market maker. Following on from the previous mergers of Swiss Bank with UBS and HSBC with Republic National Bank, it means that the number of market makers in London will be further reduced to 10. The reduction in the number of counterparties and the resultant shrinking of liquidity is giving rise to some concern that the market may find it increasingly difficult to handle major producer and official activity efficiently.

Prior Week Archive: (September 4 - September 8, 2000)

Currency movements remained the chief influence on the very quiet gold market over the week, with the continuing strength of the US dollar the major focus of attention. Gold started the week at the higher levels achieved on Friday, being fixed at $277.00 on Monday morning. The closure of the New York market for Labor Day meant that trading conditions were subdued and quotations held within a narrow range, favouring the downside slightly because of the dollar's strength. The market continued to slip lower on thin volume Tuesday, pushing down towards $275 after the reopening of the US markets.

Wednesday saw the euro at record lows against the dollar, while the weak Australian dollar also gave rise to concern, although there was little sign of any increase in producer sales or hedging out of Australia. Gold responded by easing below $274 and continued down to a fixing of $272.95 Thursday morning. A slight pull-back in the dollar helped prices hold at the $272 support level and gold bounced modestly, recovering to $274.10 by the Friday morning fix. Renewed dollar strength quickly checked the upturn, however, and quotations subsequently eased again, with gold edging down to end the week at $272.90/273.40 in New York.

The latest commitment of traders statistics published by the Commodity Futures Trading Commission shows the net short position of the large speculators on Comex falling from 26,221 contracts (equivalent to 81.6 tonnes) to 18,882 contracts (58.7 tonnes) during the two weeks ended September 5. Since then open interest on Comex has risen from 125,443 contracts to 135,367 contracts, reflecting the renewed short-selling that has occurred over the past few days. Gold lease rates for nearby dates recovered slightly, with the one-month rate firming from 0.24875% to 0.28875%; further out they remained under pressure, however, with the 12-month rate slipping from 1.13% to 1.11%.

As from October 6, the Commodity Futures Trading Commission will publish its commitment of traders report weekly. The statistics are currently compiled weekly but released bi-weekly.

Imports of gold into Turkey almost doubled during the first eight months of the year, with the total for January to August at 151.6 tonnes. That compares with 77.4 tonnes for the corresponding period of last year, and already exceeds the total for 1999 of 107.3 tonnes. Taiwan's imports of gold bars and coins reached 6.5 tonnes in August, down from 9.1 tonnes a year ago. Imports for the first eight months of 2000 were nevertheless still slightly up (+1.6%) on the same period of the previous year at 60.9 tonnes.

The Swiss National Bank announced that it sold an estimated 7.6 tonnes of gold in the first eight days of September, in line with its announced plan to complete the sale of 120 tonnes by the end of the month. The Swiss sales programme began on May 1.

The Canadian central bank announced that it sold 60,000 ounces (2 tonnes) of gold during August as part of its long-standing policy of reducing its gold reserves. Canadian reserves now stand at 1.2 million ounces (37.3 tonnes).

Prior Week Archive: (August 28 - September 1, 2000)

With the London market closed gold drifted narrowly and without feature on Monday, the only influence being the slightly stronger dollar which caused prices to ease gently to $273.45/273.95 by the New York close. London's return had little impact Tuesday with activity remaining subdued and gold fixing at $274.00 in both the morning and afternoon sessions. The OTC options expiry passed uneventfully but a weaker tone developed later in New York, reportedly due to light producer selling, and quotations slipped below $273. Gold was fixed at $272.60 Wednesday morning, where physical demand lent support to prices. The steadier tone then remained in place and encouraged some short-covering, lifting prices towards $274 again in late trading.

The next day saw quotations continue to firm in Asia on the back of a downward correction in the US dollar and move up to $274.95 in London at the morning fix. Short-covering and position squaring ahead of the three-day US Labor day holiday weekend then lent further momentum to the upturn and gold pushed up towards $278 Thursday afternoon. The impetus faded at this point however, and prices subsequently began to consolidate around the $277 level, closing in new York after a quiet half-day session Friday at $276.50/277.20.

No commitment of traders statistics were released this week. The last figures published, covering the two weeks ended August 22, showed the net short position of the large speculators on Comex increasing to 26,221 contracts (equivalent to 81.6 tonnes) up from 77.8 tonnes two weeks previously. Open interest, which stood at 129,869 contracts at that point moved up to 134,137 contracts a week later on further short selling, but has since dropped back to 124,067 contracts reflecting the short-covering that occurred over the last few days. Gold lease rates continued to fall back due to the ready availability of gold liquidity in the market, the one-month rate dropping from 0.27875% to 0.24875% and the 12-month rate from 1.22% to 1.13%.

The Dutch central bank, which has 200 tonnes of gold to sell over the next four years under the terms of the Washington Agreement on Gold, declined to put a date upon their next sale. Having already sold 100 tonnes during the first year of the agreement further sales could begin after September 26. The central bank made it clear that that there would be no pre-announcement regarding when or how the remaining gold would be sold, and that any sales that took place would only become apparent when it appeared in the balance statement of the central bank.

Prior Week Archive: (August 21 - August 25, 2000)

Gold trading remained quiet and influenced primarily by movements in the dollar last week. Gold opened unchanged in London on Monday from the previous week's New York close of $276.40/6.90, but softened a little on continued dollar strength. There was little response to reports that the government of Uruguay plans to sell 750,000 ounces (23 tonnes) or about 40% of its gold reserves. Uruguay recently placed its entire gold holdings of 56.6 tonnes on deposit in London. On Tuesday, the Fed Open Market Committee left US interest rates unchanged, as expected. The dollar edged higher against most other currencies as the week progressed, and gold prices continued to soften, slipping on Wednesday to a fraction over $270.00 in intra-day trading in New York, the lowest level since the Washington Agreement on Gold was signed last September.

London opened weaker on Thursday morning, and the first fix of $272.00 was the lowest of the week. Prices edged back up as the dollar eased on Thursday and Friday, and gold closed the week in New York at $274.00/4.50.

The latest Commitments of traders report published by the Commodity Futures Trading Commission this week showed an increase in the net short positions of the large speculators on the Comex in New York. The net short position for the two weeks to August 22 was 26,221 contracts (equivalent to 81.6 tonnes), up from 77.8 tonnes two weeks previously. Open interest, which stood at 129,869 contracts at that point, has since risen to 134,137 contracts, suggesting that further short selling has occurred. Gold lease rates eased fractionally lower over the week, the one-month rate slipping from 0.28875% to 0.27875% and the 12-month rate from 1.25% to 1.22%.

In a newspaper interview published on Friday, Swiss National Bank President Hans Meyer said the SNB had sold 85 tonnes of gold since it began its sales programme on May 1, and planned to sell a further 200 tonnes next year. The report had no impact on the market as these sales had already been announced as part of the Washington Agreement on Gold.

In other news out during the week, the internet-based commodity marketplace Intercontinental Exchange announced the launch of global over the counter trading in gold and silver.

Prior Week Archive: (August 14 - August 18, 2000)

Trading activity in gold remained mostly quiet during the week, with currency markets continuing to be the main influence on modest price movements. Renewed strength in oil prices was virtually ignored. Gold started the week slightly higher, opening on Monday at $275.80 in London on light buying encouraged by the previous Friday's commitment of traders report, which showed that the large speculators on the Comex had returned to a net short position. This buying quickly ran its course, however, and quotations drifted back to $275.45 by the morning fixing. Renewed buying emerged on the New York opening to lift quotations briefly to $276, but with follow through buying insignificant, prices retreated once more, dropping towards $274 before finding fresh support. In thin conditions the market then consolidated, holding above $274 Tuesday but unable to make further progress because of the strength of the US dollar.

A sudden downturn in the dollar helped gold firm to a morning fix of $275.50 on Wednesday morning. The price made further gains after the US opening, with modest buying interest enough to carry gold to $276.35 at the PM fix. Some active buying of September $290 gold call options was reported, which helped improve sentiment. The Asian market continued to build on the gains as the dollar weakened against Asian currencies, and gold rose to $277.15 in London on Thursday morning. This firmer tone was maintained until shortly before the New York opening on Friday, when a combination of producer selling and a recovering dollar caused quotations to retreat. Gold slipped to $275.60 at the afternoon fix before recovering on short covering to end the week at $276.40/276.90.

There were no commitment of traders statistics published by the Commodity Futures Trading Commission this week. The last figures published, covering the two weeks ended August 8, showed a switch in the net position of the large speculators on Comex from a net long 3,543 contracts (equivalent to 11.0 tonnes), to a net short 25,023 contracts (77.8 tonnes). Open interest, which stood at 122,540 contracts at this point, has since risen to 129,869 contracts, indicating that further short selling has probably occurred. Gold lease rates eased lower once more over the week, the one-month rate slipping from 0.33875% to 0.28875% and the 12-month rate from 1.27% to 1.25%.

The latest statistics released by the Swiss National Bank showed gold holdings of 37.874 billion Swiss Francs on August 20. At the current valuation of 15,107 Swiss Francs per kilogram, this puts gold reserves at 2,507 tonnes, 7.5 tonnes lower than on August 10. Cumulative gold sales since the start of Switzerland's programme on May 1 now stand at 85.6 tonnes.

Prior Week Archive: (August 7 - August 11, 2000)

The strong US dollar continued to weigh upon gold prices over the week, but the market nevertheless continued to trade narrowly with conditions remaining mostly dull. Gold started the week little changed, fixing at $273.50 in London on Monday morning and holding close to this level throughout the day. Some light speculative buying was in evidence, and gold firmed slightly to $274 by Tuesday morning. No follow through buying appeared after the US opening, however, and quotations edged back towards $273 later in the day.

Gold traded around $273 for much of Wednesday, only to dip to a ten-month low of $271 as speculative selling arose on Comex. Physical demand stemmed the sudden downturn, however, and quotations moved higher during the Asian time zone. Gold was fixed at $272.40 Thursday morning and steadied above the $272 support level as the downward pressure on prices appeared to ease, although some uncertainty was seen ahead of the Bank of Japan's decision on interest rates. Prices continued to trade quietly above $272 throughout most of Friday, but then attracted a sudden bout of activity in New York as some short positions were unwound ahead of the weekend. Gold moved up quickly in response to close the week at $274.90/275.40.

As expected, the latest statistics published by the Commodity Futures Trading Commission reported a turnaround in the net position of the large speculators on Comex, which switched from a net long 3,543 contracts (equivalent to 11.0 tonnes) to a net short 25,023 contracts (77.8 tonnes) over the two weeks ended August 8. Open interest had fallen to around 110,000 contracts as long positions were unwound, but rebounded during the period to 122,540 contracts as new short positions were built up. Since then open interest has recovered further to 128,101 contracts, suggesting that additional short selling has taken place. Gold lease rates firmed slightly over the week, although there was no shortage of liquidity; the one-month rate moved up from 0.27875% to 0.33875% and the 12-month rate from 1.07% to 1.27%.

The exceptionally low levels of gold market activity in recent weeks, which can be attributed more to declining participation in the market than to seasonal factors, were reflected in the net volume of gold cleared through the London market during July. According to London Bullion Market Association statistics, the average volume of gold transferred fell to a new historic low of 638 tonnes per day, 27% lower than in the previous month and 41% down on the same period of last year.

The South African investment bank Investec Group, which signed an agreement in June to supply the Peoples' Bank of China with a minimum 15 tonnes of gold a year for an unlimited period, announced that the first two tonnes of gold have been shipped from Johannesburg to Shenzen. The gold was supplied by the Rand Refinery.

Prior Week Archive: (July 31 - August 4, 2000)

Gold started the week slightly lower in Europe, fixing at $277.40 on Monday morning after encountering some selling in Asia, mostly related to dollar strength. The platinum group metals were once again the main focus of attention, leaving gold sidelined and market activity extremely dull. Quotations traded narrowly above $277 on Tuesday, and dipped below this support level early on Wednesday on further Asian selling. A surprise 0.25% increase in Australian interest rates lent support at this point, however, and gold promptly recovered to above $277 once again.

On Thursday the market began to come under pressure in Europe, falling back to a morning fixing of $276.65. Further selling emerged after the New York opening, and the fall in prices suddenly accelerated as stop-loss sell orders were triggered, pushing prices down to $273 during late trading. Very heavy falls in platinum and palladium occurred at the same time, and this may have had a knock-on effect on gold. Friday saw another sell-off in London, and gold dipped back towards $272 in the early afternoon. Physical buying began to emerge at this point, and prices were further underpinned by the first drop in US payrolls since 1996, which gave rise to hopes that US interest rates would remain stable. Gold spiked up to $275 but could not break above this level. Selling then gained the upper hand later in the day, and gold ended the week at $273.00/273.50.

No commitment of traders report was published by the Commodity Futures Trading Commission this week. The last statistics released were for the two weeks ended July 25 and showed the net long position of the large speculators continuing to decline on Comex, falling from 12,398 contracts (equivalent to 38.6 tonnes) to 3,543 contracts (11.0 tonnes). During the week, open interest on Comex fell to a fresh seven-year low of 110,000 contracts as long liquidation continued, but then bounced to 116,000 contracts following Thursday's bout of selling, probably marking a turnaround in speculator's positions with the large speculators now net short. Gold lease rates weakened again, reflecting the lack of demand for gold liquidity, with the one-month rate easing from 0.28875% to 0.27875% and the 12-month rate from 1.16% to 1.07%.

Prior Week Archive: (July 24 - July 28, 2000)

It was once again a quiet week for the gold market, with trading activity running at very low levels and prices holding within a narrow $2 range as the summer doldrums took over. The week opened little changed from the previous Friday, trading quietly around the $280 level and fixing at $280.05 in London on Monday morning. A small upturn in activity occurred after the US opening as some light trade selling appeared, and with oil prices turning lower on signs that Saudi Arabia was pumping additional oil, gold slipped below $279. Modest short-covering carried quotations above $279 again Tuesday, but apathy continued to surround the gold market as most attention was focussed on the soaring platinum group metals.

On Wednesday morning gold was fixed slightly firmer at $280.15, but there was no real impetus behind the move and prices edged lower again later in the day. A strengthening in the Australian dollar encouraged another brief move above $280 on Thursday, but trading volumes remained thin and gold gradually weakened once more as the US dollar started to firm. On Friday the release of US GDP statistics showing growth at 5.2% in the second quarter was well above expectations, giving another boost to the dollar as the likelihood of higher US interest rates was increased. Gold responded by slipping gradually lower, closing the week at $278.15/278.65.

The latest statistics published by the Commodity Futures Trading Commission show the net long position of the large speculators continuing to decline on Comex, falling from 12,398 contracts (equivalent to 38.6 tonnes) to 3,543 contracts (11.0 tonnes) during the two weeks ended July 25. Open interest continued to dwindle, reflecting the fall-off in trading activity, dropping from 127,059 contracts to 110,415 contracts over the week - a new seven-year low. Indications point to further long liquidation occurring since July 25, but there are, as yet, no signs of a move to build up large short positions. Gold lease rates also remained broadly soft; the one-month rate eased from 0.31875% to 0.28875% while the 12-month rate held steady at 1.16%.

In Thailand cuts in taxes on imported gold and gold products destined for export are expected to help the country grow in stature as a regional gold trading centre. In just over a month import duties on raw gold, currently 20%, will be removed, and VAT on exported goods will be payable only on the difference between purchase and selling prices.

Prior Week Archive: (July 17 - July 21, 2000)

Gold started the week slightly higher, as short-covering in Asia lifted the price gently to a fixing of $282.40 Monday morning in seasonally quiet trading. The main focus of attention in precious metals was the platinum group, which continued to make strong gains based on robust demand and tight supply. Quotations held up for most of Tuesday, consolidating tightly above $282 until late in New York, when some fund selling started prices on a downward course. US consumer price statistics released on Wednesday showed inflation, excluding the more volatile food and oil, running at only 0.2%; this undermined gold again, causing prices to slide below $280.

Gold was fixed at $277.90 Thursday morning, marking a test of the key technical support level of $278. Improved physical demand provided support, however, and fund buying later in the day pushed quotations above $279. Data from the Swiss National Bank showing that it had sold between 7 and 8 tonnes of gold over the preceding 10 days had no impact on trading, and gold edged gradually higher to close the week at $280.10/280.50.

No statistics were published by the Commodity Futures Trading Commission this week. The latest available figures, for the two weeks ended July 11, showed the net long position of the large speculators on Comex falling from 16,219 contracts (equivalent to 50.4 tonnes) to 12,398 contracts (38.6 tonnes). Since then open interest on Comex has fallen sharply from 146,022 contracts to 127,059 contracts - the lowest level since early 1993 - suggesting that a further closing out of long positions may have taken place. Gold lease rates also dropped lower over the week, the one-month rate easing from 0.40875% to 0.31875% and the 12-month rate from 1.26% to 1.15%.

Legislation is being introduced to allow the Deutsche Bundesbank to issue up to one million commemorative 1 Deutschemark gold coins next year, ahead of the introduction of euro notes and coins. The coin's price will be based on market gold prices plus an issuance premium. Net proceeds of up to DM100 million from the sale will go towards the funding of a new foundation called "Stable Money"; additional proceeds will be used to fund the renovation of museums on the Berlin museum island. At current prices the gold for the issue will amount to around 5.5 tonnes. This will be drawn from official reserves in line with the limits imposed under the Washington Agreement on Gold.

The central bank of Uruguay has completed the shipment of its entire gold reserve of 1.8 million ounces (56.6 tonnes) to London. The gold is to be placed on deposit "in order to obtain greater profitability", according to press reports.

Prior Week Archive: (July 10 - July 14, 2000)

The market started the week slightly firmer on short-covering in Asia, with gold firming to $284.25 at the AM fix on Monday. Prices started to ease once more after the US opening, however, with the upcoming UK gold auction and lower oil prices both putting downward pressure on gold. Trading conditions remained very subdued and quotations continued to drift lower Tuesday, easing to $282.85 at the afternoon fix.

Wednesday the market traded steadily ahead of the auction, gold fixing unchanged at $282.85 and holding at around this level up until the results of the auction were announced at 12.15 London time. The allotment price for the auction was extremely disappointing, coming in $3.10 below that morning's fix at $279.75, while the 25 tonnes on offer was only 1.3 times subscribed, the lowest subscription rate to date. With such a low level of bids it is obvious that the Bank of England was forced to accept bids below the market in order to dispose of the entire offering, and as the auctions are held on a single price basis the lowest price necessary to achieve the sale was the price paid by all successful bidders. Such an outcome raises the real possibility that with the market so thin a future auction may not be fully subscribed, which could leave the Bank of England in the embarrassing position of not selling the entire quota or, if the lowest bid is too low, having to declare the auction void.

Once the results of the auction were announced the gold price promptly dropped below $280 as the market absorbed the implications. The market then stabilised and edged back above this level, although sentiment remained very cautious. Over the rest of the week $280 became the support level for prices, but interest had fallen away sharply and gold traded very narrowly, ending the week slightly firmer on end-of-week book-squaring at $281.00/281.70.

Statistics published by the Commodity Futures Trading Commission showed that the net long position of the large speculators on Comex fell only modestly ahead of the latest Bank of England gold auction, dropping from 16,219 contracts (equivalent to 50.4 tonnes) to 12,398 contracts (38.6 tonnes) during the two weeks ended July 11. Since then open interest has fallen from 146,022 contracts to 141,359 contracts, suggesting that the disappointing result to the auction may have encouraged some further closing of long positions. The one-month gold lease rate continued to ease over the week, drifting down from 0.45875% to 0.40875%; the twelve-month rate firmed slightly, however, moving up from 1.24% to 1.26%.

The latest figures published by the London Bullion Market Association showed a recovery in the level of market activity during June, with the net daily clearing turnover rising by 10.5% to an average of 28.2 million ounces (877 tonnes) per day. This is the second highest figure this year, but remains well below the comparable levels for previous years; turnover in June 1999 amounted to 949 tonnes per day and in June 1998 1,089 tonnes per day.

Prior Week Archive: (July 3 - July 7, 2000)

With the US markets closed for the Independence Day holiday gold started the week quietly, fixing little changed in London at $288.05 Monday morning. Swiss National Bank statistics showing gold sales of between 11 and 12 tonnes over the previous ten days had no apparent impact on prices, merely confirming the orderly nature of the Swiss disposal programme. The stronger dollar and weaker oil prices were the main influences on the market at this time, and with trading activity at low levels quotations edged gradually lower, easing to $286.50 by the PM fixing Tuesday.

The return of New York on Wednesday saw fresh pressure applied to prices as speculative selling by funds and commission houses positioning themselves ahead of the UK auction on July 12 arose. Oil's fall below $30 per barrel following Saudi Arabia's pledge to increase output by 500,000 barrels a day if oil prices did not fall back to Opec's target price of $25 caused gold to slip further Thursday, falling below the $285 level that afternoon and continuing down towards $282 in New York. Both physical offtake and short covering lent support at the lower levels and in thin trading conditions prices ranged between $282 and $285 Friday, ending the week at $282.20/282.90.

There were no Commodity Futures Trading Commission statistics published this week. The latest available figures show a modest increase - up 1,559 contracts to 16,219 contracts (equivalent to 50.4 tonnes) - in the net long position of the large speculators taking place on Comex during the two weeks ended June 27. Open interest since then has eased back slightly from 148,158 contracts to 145,224 contracts, indicating that some closing out of long positions may have since occurred. Gold lease rates showed little change over the week, falling only slightly with the one-month rate easing from 0.48875% to 0.45875% and the 12-month rate from 1.30% to 1.24%.

The Canadian finance ministry announced that it sold 94,000 ounces of gold during June as part of its long-standing sales programme. Canada's official gold reserves now stand at only 1.2 million ounces (37.3 tonnes).

Imports of gold into Turkey totalled more than 101 tonnes during the first half of the year, more than double the 47 tonnes reported for the same period of 1999. Tourism, an important component in jewellery demand, is enjoying a strong recovery after last year's sharp decline following Turkey's disastrous earthquakes and political unrest resulting from the arrest of Kurdish leader Abdullah Ocalan.

Prior Week Archive: (June 26 - June 30, 2000)

The market opened the week steadily after Friday's slight sell-off in New York, with sentiment turning more positive on the strong underlying support that had become evident at the $282 level. Gold firmed on Monday, fixing at $283.00 that morning and edging up to $284 later in the day. With many traders attending the Financial Times Gold Conference in Paris market activity was subdued, however, and no follow through buying was evident. Quotations held at around $284 throughout most of Tuesday but then rose again on fund buying in New York, reaching $286 by the close.

Quotations then consolidated as the market focussed upon the Federal Open Market Committee meeting, which was expected to leave US interest rates unchanged. Fresh fund and option related buying arose Wednesday afternoon, lifting gold to $288.00 at the PM fix and accelerating up to $293 in New York as the dollar weakened in response to the Federal Reserve's decision not to raise US interest rates. Once the upward momentum started to fade so profit-taking set in, causing prices to drop back. Gold was fixed at $290.85 on Thursday morning, where some initial support was found; after another attempt on the upside, which carried prices above $292, gold backed off again, however, subsequently trading narrowly between $288 and $290 as activity fell away ahead of the long US holiday weekend. Gold ended the week in New York at $289.75/$290.45.

The latest commitment of traders report published by the Commodity Futures Trading Commission shows a modest increase in the net long position of the large speculators on Comex. During the two weeks ended June 27 this position rose from 14,660 contracts (equivalent to 45.6 tonnes) to 16,219 contracts (50.4 tonnes). Open interest has since increased from 143,700 contracts to 148,158 contracts, indicating that a further gradual accumulation of long positions may have taken place in the interim. Gold lease rates fell back over the week as the recent tightness in liquidity eased, the one-month rate from 0.87875% to 0.48875% and the 12-month rate from 1.58% to 1.30%.

The South African Reserve Bank has agreed $1.5 billion in new credit facilities with a consortium of 38 international banks, which includes a three-year gold denominated term credit for $500 million. The gold denominated facility will be used to consolidate existing bilateral gold pre-export finance lines and to extend the maturity of profile of the bank's foreign loans. The gold credit will be drawn down in four equal tranches on successive Friday's beginning in July. Lambertus Van Zyl, head of the Reserve bank's international banking department said "it sends a message that we are prepared to borrow gold and to keep it in our reserves."

Under the auspices of the IMF's Special Data Dissemination Standard the Monetary Authority of Singapore has revealed, for the first time, the amount of gold held in its official reserves. As at end-May holdings are reported at 4,096,439 ounces, equivalent to 127.4 tonnes; this includes gold loaned to or, where appropriate, swapped with commercial banks.

Prior Week Archive: (June 19 - June 23, 2000)

The week started with early physical buying pushing gold up towards $290 Monday morning. Statistics showing the development of a speculative net long position on Comex (see below) then served to unnerve the market, however, and with the dollar showing strength quotations slipped back to $285.90 at the PM fix. Firmer gold lease rates were giving rise to talk of producer selling, while stop loss selling had also been a feature. Good underlying support was evident at the $285 level and as the market quietened so gold fell into a range trading pattern. Continued dollar strength tended to weigh on prices but gold held at around $286 throughout Tuesday and Wednesday, with data from the Swiss National Bank showing that it had sold between 4 and 5 tonnes of gold over the preceding 10 days provoking no reaction.

Quotations remained close to $286 Thursday morning, fixing at $286.10 in London. Higher oil prices, short-covering and rumours (promptly denied) that US Federal Reserve Chairman Alan Greenspan had been involved in a car accident lifted prices after the US opening and then triggered a swift run up towards $289. In the event, light overhead resistance was enough for gold to relinquish its gains and prices were soon back in the previous trading range. No fresh sense direction of was initially apparent Friday and the market traded narrowly above $285 until late in New York, when weekend book adjustments pushed gold below the $285 support level to end the week at $282.90/283.40.

No Commodity Futures Trading Commission statistics were published this week. The last figures published showed a sharp turnaround in the positions of the large speculators on Comex. During the two weeks ended June 13 this position changed from a net short 40,624 contracts (equivalent to 126.4 tonnes) to a net long 14,660 contracts (45.6 tonnes), a switch of 55,284 contracts (172.0 tonnes). Open interest, which at this point stood at 141,504 contracts, has since risen only slightly to 143,421 contracts indicating that there has been little subsequent change. Gold lease rates maintained their firmer tone over the week, the one-month rate rising again to 0.87875% and the 12-month rate increasing to 0.58%.

At the Financial Times World Gold Conference in Paris central bankers from France and Austria suggested that the fall in the supply of US bonds could make gold look attractive to investors looking for a credit risk free asset. The Banque de France's Herve Ferhani said "one factor that has affected capital markets is the possibility of a dearth of credit risk free assets. If the risk appetite of central banks has not increased then this move to risk free paper may have to be rebalanced - there is the question whether gold could be part of the solution." The Austrian central bank's Peter Zoellner agreed saying "gold in its original form is not someone else's liability so it is practically risk free. The (bond) buyback programmes of some governments could lead to a lack of assets of highest credit quality. To the public gold is something real with a physical existence, unlike abstract foreign exchange."

Shanghai's official daily newspaper reported that plans to set up a gold exchange, as part of its move to liberalise the precious metals market, were likely to be delayed until next year due to unresolved technical considerations such as the planned value-added tax on gold miners and processors. The newspaper expected Beijing to start laying the groundwork for deregulation in October, however, as China prepared for entry to the World Trade Organisation.

Prior Week Archive: (June 12 - June 16, 2000)

The gold market maintained its stronger tone over the week, with trading activity picking up in line with the increased volatility in prices. Prices opened in line with the previous week's close Monday, with gold fixing at $284.10 that morning and holding at around that level for most of the day in Europe. Quotations jumped above $286 late in New York, however, sparking heavy fund buying in Asia Tuesday amid widespread rumours of a big producer buy-back. London then lent fresh momentum and gold rallied up to a fixing of $293.00, the highest in over three months. The release of softer-than-expected US retail sales figures, a greater resilience in the dollar and news that Switzerland had sold 10.9 tonnes of gold during the previous ten days then served to check the rally, and amid disappointment at the lack of follow-through buying, gold dropped back to the $286 level.

Gold held above $286 in Europe in nervous conditions on Wednesday. The release of US CPI statistics showing a modest 0.1% increase in consumer prices initially had only a slight impact on both the dollar and gold, but as the dollar later weakened, so short-covering in gold after the previous day's selling carried prices sharply higher, with the market moving up to $292 in New York. These higher levels were maintained in early trading Thursday, and prices held steady as the market awaited a statement from Switzerland.

The Swiss National Bank, which started its gold sales programme on May 1, announced later that morning that it had sold 26.5 tonnes of gold by the end of May and 40 tonnes by the middle of June. The current timetable calls for the sale of 120 tonnes by the end of September, and this announcement showed that the Swiss are on target to achieve that figure. While this was in line with market expectations, prices eased after the news, falling back to $287.40 by the PM fix. Conditions remained volatile however, and quotations bounced back towards $290 by the US close. Friday saw gold move as high as $292, but a tightening of gold lease rates focussed attention upon producer activity and prices later gave up their gains to close the week at $289.00/289.50.

The latest commitment of traders report published by the Commodity Futures Trading Commission shows the scale of the fresh buying and short covering that took place during the first half of June. In the two weeks ended June 13, the net short position of the large speculators on Comex, which stood at 40,624 contracts (equivalent to 126.4 tonnes) on May 30, was totally eradicated and replaced by a net long position of 14,660 contracts (45.6 tonnes), a turnaround of 55,284 contracts (172 tonnes). These figures refer only to the main US futures market, of course, and while there were also reports of active short-covering on the over the counter market, it is not yet clear whether the short positions here have also been totally covered. Open interest on Comex stood at 141,504 contracts on June 13 and has since increased to 145,249 contracts, suggesting that some further purchasing may have since taken place. Gold lease rates showed a stronger tone over the week, with the market suggesting that the higher prices were encouraging a rise in producer hedging; over this period the one-month rate rose sharply from 0.35% to 0.75% and the 12-month rate from 1.20% to 1.50%.

Investec, the South African investment bank, has signed an agreement to provide the People's Bank of China (PBOC) with a consignment stock of approximately one tonne of gold every three weeks. The agreement, which is for an unlimited period of time, will provide for Investec shipping a minimum 15 tonnes of gold to China each year. China produces about 150 tonnes of gold a year but consumes about 200 tonnes, making it a net importer. All buying and allocation of gold in China is controlled by the PBOC, China's central bank. The Chinese gold market is highly regulated, but with the silver market being deregulated earlier this year it is thought to be only a matter of time before the gold market is liberalised. Raymond Chan, outgoing chairman of the Chinese Gold and Silver Exchange Society in Hong Kong, was quoted last week as saying: "I expect (deregulation) at the latest will be by next June or the latter half of next year."

Prior Week Archive: (June 5 - June 9, 2000)

The week started strongly for gold as the market continued to build on the sharp price rally that had started the previous Friday. The US dollar helped by maintaining its weaker tone, and follow-through buying of gold was evident almost from the outset, a significant part of it related to the covering of short positions. Gold was fixed firmer at $281.70 Monday morning, and with fresh buying emerging after the US opening, the price pushed up to the $285 level. Gold continued to head higher Tuesday with activity picking up as the squeeze on the shorts was maintained. Tuesday afternoon's fix was $288.40, and the price briefly tested overhead resistance at $290.

Profit-taking then set in and gold swung between $284 and $291 in volatile trading conditions on Wednesday before settling towards the lower end of this range. Further dollar weakness after the European Central Bank raised interest rates by 0.5% then lent fresh support to gold, which jumped to $287 on Thursday morning. Conditions began to quieten, however, and quotations slipped back to consolidate between $284 and $286. On Friday gold continued to range-trade, with frequent tests of underlying support occurring. The release of US stronger-than-expected US producer price figures for May, up 0.2% rather than the widely forecast 0.1%, had little impact on gold which closed the week in New York at $283.60/284.10.

No commitment of traders statistics were published by the Commodity Futures Trading Commission this week. The last figures released showed heavy speculative short selling of gold taking place during the second half of May, with the net short position of the large speculators on Comex rising sharply to 40,624 contracts (equivalent to 126.4 tonnes) by May 30. The sudden rally in prices since then was accompanied by active short-covering, however, and open interest on Comex has consequently fallen from 159,156 contracts to 138,112 contracts. Gold lease rates showed little change over the week, the one-month rate standing at 0.35% and the 12-month rate at 1.20%.

The latest statistics issued by the London Bullion Market Association show only a slight increase in the reduced levels of clearing that have been a feature of the depressed market in recent months. The average daily net clearing volume in London during May amounted to 25.5 million ounces (793.1 tonnes) compared with 25.2 million ounces (783.8 tonnes) in April and 32.6 million ounces (1,014 tonnes) in May last year.

The import of gold bars and coins into Taiwan during May almost doubled from the previous month, rising from 7.13 tonnes to 14.17 tonnes. Over the first five months of the year, gold imports totalled 45.78 tonnes, up 34.3% from 34.09 tonnes for the same period of 1999. Dealers reported that strong demand for commemorative gold coins was an important factor behind the increase in May.

The Russian central bank is seeking to stop a scheme whereby Russian commercial banks are exporting gold and silver without paying a 5% export duty. Up until October last year, most newly-produced gold was sold via commercial banks to the central bank at a 2% discount, which compared favourably with the export tax. More recently, however, commercial banks have been exporting gold to other CIS countries which are members of a customs union with Russia and are thus exempt from duty. These countries can then re-export the gold free of duty.

Prior Week Archive: (May 29 - June 2, 2000)

The gold market started the week slightly higher, with gold being fixed at $274.40 on Tuesday morning. Sentiment was very uncertain in the light of the previous week's sudden sell-off, however, and activity was subdued after the long holiday weekend in both the UK and US. The strength of the dollar, which had contributed to the recent weakness in gold, was the main focus of attention and its relative steadiness later in the day caused prices to relinquish some of their gains. Long liquidation ahead of the expiry of the Comex June contract also applied some downward pressure to the market, as did a sharp rally in technology stocks, and gold slipped back to $272.25 in London Wednesday morning. Traders reported a decided slowdown in physical activity and quotations traded quietly and narrowly above $272 as the dollar and stock markets continued to be watched for direction.

The closure of European markets for Ascension Day also suppressed interest and by Friday morning little change had been seen. The release of figures by the Swiss National Bank showing that 8.8 tonnes of gold had been sold over the previous ten days had no apparent impact on prices and gold was fixed at $272.95. That afternoon prices began to firm, however, moving up towards $274 in Europe; the release of weaker-than-expected US employment data showing a rise in the jobless rate and a lower increase in non-farm payrolls then began to undermine the dollar and the gold market suddenly burst higher. The break above the $275 resistance level then triggered heavy buying from technically-based funds in the US and quotations soared, reaching a peak of $282.70 before profit-taking set in. Gold then slipped back to $278, but once the selling had run its course rebounded again, running up to close the week at $281.00/281.75.

The latest statistics published by the Commodity Futures Trading Commission illustrate the heavy levels of speculative short-selling that occurred over the second half of May. Consequently, during the two weeks ended May 30 the net short position of the large speculators on Comex rose sharply from 29,530 contracts (equivalent to 91.8 tonnes) to 40,624 contracts (126.4 tonnes), at which point open interest stood at 159,156 contracts. The more recent short covering that was triggered towards the end of the week saw open interest drop back to 150,177 contracts in response. Probably also reflecting the reduction in short positions, gold lease rates also eased, the one-month rate falling from 0.53% to 0.36% and the 12-month rate from 1.19% to 1.16%.

Monday morning gold resumed its upward course, moving up to $285 in Europe during late morning trading. The market's perception of the dollar, which has been such a negative factor for gold in recent weeks, appears to have changed to gold's benefit. Technical resistance is anticipated around the $285 level but the market is displaying a much healthier volume of activity, and price volatility could remain a feature over the next few days.

Prior Week Archive: (May 22 - May 26, 2000)

Gold started the week on a slightly firmer note as sharp falls in equity prices encouraged some holders of speculative short positions in gold to buy back their sales. Quotations consequently firmed to the $274 level on Monday, but with trading conditions thin and nervous ahead of the sixth UK gold auction the upturn was decidedly muted. The release of data by the Swiss National Bank indicating sales of 8.9 tonnes of gold in the 10-day reporting period ending May 19 had no obvious impact on prices, being interpreted as steady and orderly progress towards Switzerland's sales target of 120 tonnes by end-September.

Tuesday saw prices continue to gradually firm as the UK auction approached. Gold was fixed at $275.15 in the morning and edged up towards $276 by the 11.30 AM cut-off time for bids. The results of the auction were announced as follows; the auction price of $275.25 was slightly above that morning's fix, but the 25 tonnes offered was only 2.7 times subscribed - the second lowest subscription ratio seen so far. The scaling factor at the allotment price was 73.7%, which was the second highest to date and suggested that most bids were below the market. Gold responded by see-sawing uncertainly before gradually coming under pressure once again and softening in sluggish trading conditions.

On Wednesday morning gold was fixed lower at $273.90 and held narrowly above the $273 support level until late on Thursday, when the negative sentiment stemming from the UK's auction sparked professional and fund selling in New York. Quotations plunged in response, falling to an eight-month low of $269.70. Support emerged at the lower levels, however, and with both the OTC options expiry and the long holiday weekend in the US and UK looming prices bounced. Gold ended the week in New York at $272.10/272.60.

No commitment of traders report was published by the Commodity Futures Trading Commission this week. The last figures published, for the two weeks ended May 16, showed the large speculators on Comex holding a net short position of 29,530 contracts (equivalent to 91.8 tonnes). Since then open interest has risen by some 4,000 contracts to 164,935 contracts, indicating that a further increase in the net short position may have occurred. Gold lease rates for the one-month maturity jumped over the week from 0.29% to 0.53%, perhaps also reflecting increased speculative short-selling. The 12-month rate was barely changed, rising only slightly from 1.16% to 1.19%.

Concerns over the impact of the drought in five Indian states on gold demand were partially allayed this week when India's weather office said that it expected the monsoon this year to be normal. India receives about 80% of its rainfall from the monsoon, which occurs between June and September and is an important influence on consumer demand, wages and agricultural prices.

Prior Week Archive: (May 15 - May 19, 2000)

The market started the week quietly and listlessly with prices still contained within the narrow $275-278 trading range that had dominated during the previous week. Gold was fixed at $275.65 Monday morning; trading remained subdued as dealers marked time ahead of the Federal Open Market Committee meeting, which was widely expected to lead to an aggressive 0.5% increase in US interest rates. On Tuesday activity continued quiet in Europe, but the confirmation of a 0.5% hike in US interest rates put some downward pressure on prices during the New York trading session and pushed gold below its $275 support level.

The strong dollar continued to dominate on Wednesday, with fears that the resulting Australian dollar and South African rand weakness could trigger producer hedging leading to fund short selling. Gold dropped to $273 in New York and continued down to a fixing of $272.50 in London on Thursday morning, the lowest fix for eight months. Once the selling ran its course a steadier tone developed, however, and as attention became focussed upon the next UK gold auction prices settled down nervously. Modest short-covering and end-of-week book-squaring lifted the market from its lows Friday and gold closed the week in New York at $273.70/274.40.

The latest statistics published by the Commodity Futures Trading Commission showed the net short position of the large speculators increasing on Comex during the two weeks ended May 16, rising from 20,353 contracts (equivalent to 63.3 tonnes) to 29,530 contracts (91.8 tonnes). The low level of market activity since then has seen open interest remain steady at around 160,000 contracts, indicating little subsequent change in speculative activity. Gold lease rates eased back over the week as market liquidity remained in plentiful supply, the one-month rate slipping from 0.35% to 0.29% and the 12-month rate from 1.25% to 1.16%.

Prior Week Archive: (May 8 - May 12, 2000)

It was an extremely dull week for gold, with prices contained within a narrow $275-278 trading range throughout. Gold continued to attract good support below the market, but the threat of Swiss sales into strength and the approach of the next UK gold auction on May 23 appeared to cap upward moves. Quotations moved narrowly with trading volumes consistently low. Some producer selling was reported on Tuesday, with the weak Australian dollar and South African rand being cited as the main trigger behind these sales, but most market participants seemed prepared to remain sidelined and price movements were consequently muted.

On Thursday the Swiss National Bank released a report that the market had hoped would detail gold sales made since the sales programme began at the start of the month. In the event, with Swiss gold holdings being simultaneously revalued to market prices, it was difficult to calculate the level of sales. Estimates of the total of sales completed to date ranged between 5 and 15 tonnes, which was seen as disappointing as there had been suggestions to the effect that the market had successfully absorbed a much larger quantity. Prices barely reacted in Europe, however, only dipping a little in late US trading. Market conditions remained sluggish on Friday. Quotations firmed to above $277 ahead of the release of US producer price data, but the fall of 0.3% reported for April eased inflationary fears and gold slipped lower again, ending the week in New York at $275.90/276.40.

There were no statistics released by the Commodity Futures Trading Commission this week. The last figures published, which were for the two weeks ended May 2, showed a sizeable 60 per cent jump in the net short position of the large speculators on Comex - up from 20,353 contracts (equivalent to 63.3 tonnes) to 32,595 contracts (101.4 tonnes). Some of this speculative selling had been made in anticipation of the commencement of Swiss gold sales in May. The market's subsequent lack of response to this development resulted in some short-covering, but open interest on Comex has crept up once more to 161,204 contracts, suggesting that some modest short-selling may since have returned to the market. Gold lease rates also held steady over the week, the one-month rate easing marginally from 0.36% to 0.35% and the 12-month rate from 1.27% to 1.25%.

The London Bullion Market Association announced that the net volume of gold cleared through London during April rose 4% from the previous month to an average of 783.8 tonnes per day. This was at exactly the same level as in April last year.

The fifth seat on the London Gold Fix, made vacant by the merger of fixing members HSBC and Republic National Bank of New York, has been purchased by Credit Suisse First Boston. The five members of the Fix are now N.M. Rothschild, Deutsche Bank, HSBC, ScotiaMocatta and Credit Suisse First Boston.

Prior Week Archive: (May 1 - May 5, 2000)

Gold opened the week lower in thin trading conditions because of the May 1 public holiday in several markets. The price fell to $272 as US traders reacted to the start of the Swiss National Bank's (SNB) gold sales programme. Prices recovered a little later on Monday, however, and the reopening of the European markets on Tuesday saw prices continue to firm. The SNB announced that it had started to sell on May 1, intending to place a maximum of 120 tonnes with the market by the end of September. This is in line with the limits imposed by the Washington Agreement on Gold (WAG). No details were given on how much had actually been sold so far, but it was confirmed that the Bank for International Settlements had been commissioned to conduct the sales. The market took the view that these well-flagged sales were already factored into prices, and was reassured by the fact that the WAG framework was being adhered to.

With Swiss activity thus discounted, gold recovered to a PM fixing of $275.45 on Tuesday, and with short-covering in evidence continued up to $277.60 in London on Wednesday morning. The strong dollar, which broke the $0.90 level against the euro, then caused gold to dip back below $276. Buying interest had been temporarily dampened by the start of the Golden Week holiday in Japan, but short-covering in New York lent new impetus to the rally and gold surged to $280 in London on Thursday. On Friday strong US employment statistics were released, showing the jobless rate falling to 3.9%, the lowest level since January 1970. Gold promptly spiked up to $282 on fund buying, but then encountered strong producer selling which reversed gold's course. In active trading, quotations dipped to $276 before bouncing late in New York to close the week at $278.70/279.20. This coming week may be dominated by US interest rates, which some market participants are anticipating may be raised by an aggressive 0.50% in order to cool mounting inflationary pressures.

The latest statistics released by the Commodity Futures Trading Commission, which cover the two weeks ended May 2, show a sizeable 60 per cent jump in the net short position of the large speculators on Comex. Over this period increased speculative short-selling pushed the net short position up sharply from 20,353 contracts (equivalent to 63.3 tonnes) to 32,595 contracts (101.4 tonnes). Some of this selling was based on expectations that the start of Swiss official gold sales would trigger a sell-off in gold. In the event, this failed to occur, and market talk indicates some short-covering has since taken place. The subsequent fall in open interest from 168,231 contracts to 161,926 contracts lends weight to this argument. Gold lease rates showed little change over the week, the one-month rate holding firm at 0.36% and the 12-month rate easing slightly from 0.32% to 0.27%.

Reflecting the growing gold consumption in the Middle East, a new gold market is being constructed in Muscat in Oman, which ranks fourth in terms of Gulf gold consumption after Saudi Arabia, Dubai and Kuwait. This will bring all the existing local gold retailers under one roof and is expected to become a major tourist attraction. The World Gold Council is acting as consultants to the project.

Prior Week Archive: (April 24 - April 28, 2000)

Gold opened the week at just over $280 on Monday in New York, with most other trading centres still closed for the Easter break, but the price began to edge lower once the other markets reopened on Tuesday. Gold was fixed in London at $280.00 on Tuesday morning, and then slipped gradually lower during the week before reaching Friday's New York closing level of $273.25/$273.75.

The release of the annual gold survey from industry analysts Gold Fields Mineral Services on Wednesday kept gold under pressure. GFMS suggested that prices above $300 were unsustainable in the continued absence of genuine investor demand. The lack of such demand was the main reason why price surges above $300 an ounce in September 1999 and February this year were not sustained, the consultants said. These comments triggered some speculative selling on the Comex, driving prices down to the lowest levels seen this year. However, GFMS went on to say that a price below $250 an ounce would be equally unsustainable unless central banks and private holders of gold were prepared to sell and lend more metal at lower prices, something that did not happen last year. GFMS added that continued Asian economic recovery, coupled with a world GDP growth of around 4.2%, should encourage robust physical gold demand this year.

On Friday, the Swiss National Bank confirmed its previously announced plan to start selling some of its gold reserves in May. The sales, which fall within the terms of the Washington Agreement on Gold signed by Switzerland and 14 other European central banks last September, could begin as early as the first week of May, according to SNB chairman Hans Meyer. The Washington Agreement limited total sales by the signatories to 2,000 tonnes over a five-year period. The SNB has not yet disclosed what sales method it will use. The market expects discreet sales through the Bank for International Settlements along the recent Dutch pattern, rather than the UK choice of a series of regular auctions that have a disruptive effect on prices.

There were no statistics released this week by the Commodity Futures Trading Commission. The last figures published covered the two weeks ended April 18, and showed a small reduction in short positions on the Comex. The net short position of the large speculators fell from 23,311 contracts (equivalent to 72.5 tonnes) to a net short of 20,353 contracts (63.3 tonnes). Gold liquidity encountered no significant pressure this week; the one-month gold lease rate firmed a little from 0.29% to 0.36%, and the 12-month rate also edging upward from 1.25% to 1.32%.

Prior Week Archive: (April 17 - April 21, 2000)

The week was relatively quiet as the markets looked forward to the Easter holidays, which brought a four-day weekend in most trading centres. Gold was fixed at $283.50 on Monday morning, and climbed to a spot high of $284.75 in London - the highest level of the week - before easing back as the US stock market showed no signs of repeating the volatility that had marked trading the previous week. Monday's New York closing level was $281.80/$282.60.

Prices then held steady in a narrow trading range between $280 and $282, before edging below the $280 level on Thursday. Gold ended the week on Thursday with a New York close of $279.50/$280.00.

Statistics released on Friday by the Commodity Futures Trading Commission for the two weeks ended April 18 showed a small reduction in short positions on the Comex. The net short position of the large speculators fell from 23,311 contracts (equivalent to 72.5 tonnes) to a net short of 20,353 contracts (63.3 tonnes). Gold liquidity remained freely available, with the one-month gold lease rate easing fractionally during the week from 0.31% to 0.29%, and the 12-month rate firming a touch from 1.24% to 1.25%.

Prior Week Archive: (April 10 - April 14, 2000)

The week opened with gold moving higher in response to the news that speculators on Comex had become heavily short, which many market participants saw as a guarantee of large-scale buying in future when the short positions are covered. Gold was fixed at $281.50 on Monday morning and firmed towards $283 that afternoon, where overhead resistance was encountered. Some light profit-taking then set in and prices edged back to $281 on Tuesday morning, only to bounce briefly up to $283 again after the Nasdaq opened weaker in New York. This small rally quickly ran its course, however, and with the market seemingly lacking direction, gold prices drifted again.

The news that the Swiss would start gold sales in May (see below) caused quotations to test support at $280 on Wednesday, but strong Asian demand helped to put a floor under prices, and traders soon accepted that the Swiss announcement was already priced into the market. Another sharp fall in Nasdaq stocks after the Comex close helped gold move above $281 on Thursday morning, but market activity was too subdued for prices to mount a serious rally and quotations remained rangebound ahead of the release of US inflation statistics on Friday. These figures showed a surprising 0.7% jump in the March index of consumer prices and a 0.4% rise in the core inflation rate, raising fears of both higher inflation and interest rates and causing US stocks to plunge. Gold responded swiftly by surging to $286, but once again failed to maintain the higher levels in spite of continued stock market weakness - the Dow ended down 618 points or 5.7% and the Nasdaq off 356 points or 9.7% - and gold prices eased back to close the week in New York at $282.50/283.50.

No Commodity Futures Trading Commission statistics were released this week. The last figures published were for the two weeks ended April 4, and showed a sharp turnaround of 119 tonnes taking place on Comex. The large speculators' previous net long position of 14,933 contracts (equivalent to 46.4 tonnes) was completely erased and replaced by a heavy net short position of 23,311 contracts (72.5 tonnes). Fears over central bank activity had once again been the catalyst behind the long liquidation and short selling, but this pressure quickly eased and open interest fell back to reach 150,824 contracts by April 14 as short positions were subsequently reduced. Gold liquidity remained freely available and gold lease rates began to retreat again over the week, the one-month rate falling from 0.42% to 0.31% and the 12-month rate from 1.32% to 1.24%.

The Swiss National Bank (SNB) announced on Wednesday that, as expected, it will start its programme of gold sales in early May. These sales, which are governed by the Washington Agreement on Gold, are planned to reach a total of about 1,300 tonnes. The SNB said the method of sale would be announced nearer the time, but the Swiss sales are thought unlikely to involve auctions as is the case with the UK's current programme. The Finance Ministry said that the SNB would co-ordinate the sales closely with other European central banks.

The LBMA reported that London's net gold clearing statistics fell during March as trading ranges narrowed and volatility declined from February's levels. The number of ounces transferred fell 19% to a daily average of 24.2 million ounces (752.7 tonnes), which is the second lowest level on record.

In Taiwan, imports of gold bars and coins in March rose 19.44 per cent to 9.572 tonnes from 8.014 tonnes a year earlier. For the first quarter, gold imports totalled 23.921 tonnes, 33.25 per cent up from 17.951 tonnes for the same period in 1999.

Gold imports into Turkey surged to 52.5 tonnes during the first quarter of this year, up 219 per cent from 16.4 tonnes for the same period of 1999. Increasing investment demand in the local market, expectations of a good tourist season and good prospects for higher jewellery exports were cited as the main reasons behind this jump.

Prior Week Archive: (April 3 - April 7, 2000)

The week opened with the National Bank of Austria's announcement that it had sold 30 tonnes of gold during 1999 as part of the Washington Agreement on Gold, and that it intended to sell another 60 tonnes by September 2004. These sales, which had been made quietly on a forward basis through the Bank for International Settlements, were accepted by the market as within the Agreement's limits, and the news had only a slight impact on prices. In quiet trading conditions gold eased below $278 on Monday and gently continued down to $276.75 at the morning fix on Tuesday. Stock market volatility, which had become a feature of the financial sector over the previous few days, was lending some support, however, and the dramatic collapse in the technology-oriented Nasdaq stock index after the US opening brought the gold market suddenly to life. Plummeting share values suddenly reminded investors of gold's traditional role in times of uncertainty, and a flight to quality ensued, causing gold to rally aggressively up to a high of $288 before easing to $285 by the New York close.

Wednesday saw gold continue to relinquish some of its equity-inspired gains. Some of the previous day's buyers had looked at gold as only a temporary home for funds, while others were happy to take profits on the sharp move. Calmer equity markets also eased anxieties, and by Thursday morning quotations were testing underlying support at the $280 level. Signs of a recovery in stock markets pushed prices below $279 later in the day, but then gold steadied, helped by an upturn in demand in Asia, and recovered to close the week in New York at $279.70/280.70.

The latest statistics released by the Commodity Futures Trading Commission revealed that a sharp turnaround of 119 tonnes in speculative positions took place on Comex during the two weeks ended April 4. Over this period the net long position of the large speculators, which stood at 14,933 contracts (equivalent to 46.4 tonnes), was completely erased and replaced by a substantial net short position of 23,311 contracts (72.5 tonnes). The long liquidation and short selling, mostly triggered by central bank fears, disappeared later in the week, and open interest slipped back from 155,378 contracts to 152,932 contracts, suggesting some subsequent reduction in short positions. Gold lease rates dropped back over the week, the more volatile one-month rate easing from 0.42% to 0.3%, and the one-year rate declining from 1.44% to 1.32%.

The Swiss National Bank announced that it had 328 tonnes of gold out on loan at the time of the Washington Agreement on Gold last September, when it and 14 other central banks agreed to impose a five-year moratorium on new gold lending. The total represented a sizeable 75% increase over the 187 tonnes on loan at the end of 1998. The SNB also reported that it received an annual yield of 1.6% on its gold lending in 1999, and that the average length of time to maturity of gold loan agreements was 7.25 months. Interestingly, the SNB also said that in the middle of 1999 it began conducting operations in which counterparties put up securities as collateral in order to reduce the credit risk on gold lending. By the end of 1999, 23% of all the SNB's gold loans were backed by such an arrangement.

Canada's central bank announced that it sold 70,000 ounces (2.2 tonnes) of gold during March as part of its long-standing disposal programme, leaving remaining gold holdings at 1.5 million ounces (46.7 tonnes).

The IMF announced that it had completed off-market transactions revaluing 12.944 million ounces of gold as part of its share of funding for debt relief. These transactions, which involved the IMF selling gold to member countries and immediately accepting it back in payment for the obligations of those countries to the Fund, took place in the period from December 14 to April 5, and had no impact on the gold market.

Prior Week Archive: (March 27 - March 31, 2000)

The publication of a report in the Sunday edition of the French newspaper Le Monde, suggesting that the French government may be considering the possibility of selling some of the country's gold reserves, put the gold market under downward pressure from the outset on Monday. The newspaper stated that the head of the finance committee of France's National Assembly had suggested to Prime Minister Lionel Jospin that future shortfalls in the pension system could be covered through the sale of a portion of the Banque de France's gold holdings. Although this report was unconfirmed and against the strictures of last September's Washington Agreement on Gold market sentiment was effected. Gold fixed slightly weaker at $284.35 on Monday morning and edged lower until the New York opening, when the selling pressure suddenly intensified causing quotations to plunge towards $280.

On Tuesday a spokesman from the Banque du France said " contrary to the groundless rumours circulated in the gold market, the Bank of France confirms that there is, of course, no question of it selling gold". Despite this statement market sentiment remained very negative, not only for gold but for the other precious metals. Wednesday saw gold slide back on fund selling and repositioning ahead of the Comex options expiry to a low of $274.40, its lowest levels in six months, while silver fell below the key $5 level to 10 month lows. By Thursday morning gold had recovered slightly, fixing at $276.70, but further fund selling was evident in New York causing quotations to fall back to $275.75 at the PM fixing. A steadier tone developed Friday against the background of the closure of the Tiger Management hedge fund. This fund is known to have been very active in precious metals over recent years, but most analysts are of the opinion that Tiger closed out its metal positions some time ago. After hovering around $276 for most of the day physical buying emerged later, helping gold recover to close the week at $278.70/279.20 in New York.

No Commodity Futures Trading Commission statistics were released this week. The last figures published were for the two weeks ended March 21 and showed only a fairly modest reduction in the net long position of the large speculators on Comex, down from 18,671 contracts (equivalent to 58 tonnes) to 14,933 contracts (46.4 tonnes). Open interest, while volatile in response to both long liquidation and short-selling, was little changed by the end of the week, down at 157,604 contracts. Gold lease rates firmed over the week, mostly for short-dated deposits, which probably reflected an upturn in speculative short-selling. The one-month rate rose from 0.31% to 0.42% and the 12-month rate from 1.40% to 1.44%.

Asked to end speculation that the New York Federal Reserve had intervened in the gold market, Federal Reserve Chairman Alan Greenspan in a letter to Congress replied, "I can say unequivocally that the Federal Reserve Bank of New York has not intervened in the gold market in an attempt to manipulate the price of gold on its own behalf or for the US Treasury or for anyone else."

This morning (Monday, April 3), the National Bank of Austria announced that, as part of the Washington Agreement on Gold, it had sold 30 tonnes of gold during 1999 and that it intended to sell up to another 60 tonnes before the Agreement expires in September 2004. The sales have been made on a forward basis via the Bank for International Settlements and will not become visible in the consolidated weekly report of the Eurosystem until the relevant delivery dates. The amount still to be sold will include sales to the Austrian Mint for the production of the gold Philharmoniker coin, which over the past decade has consumed an average 13.5 tonnes per annum. This announcement has had no apparent impact on prices, being seen as part of the Agreement and also filling the last gap in the intended sale of 2,000 tonnes over five years.

Prior Week Archive: (March 20 - March 24, 2000)

The week opened on a cautious note as the market geared up for the fifth UK gold auction on Tuesday. Prices had turned weaker over the previous few days as traders positioned themselves ahead of the auction, but market activity fell away on Monday as risk-averse participants became sidelined. Gold was fixed at $285.75 at both the morning and afternoon fixes, and ended the day in New York at $285.50/286.00. Although analysts had declared the likely outcome of the auction difficult to predict, some light short-covering emerged in Asia on Tuesday. The price edged up ahead of the auction, fixing at $286.15 and being quoted at $285.90/286.40 just before the results were announced. In the event, the auction's allotment price was unexpectedly lower at $285.25; the 25 tonnes sold were three times subscribed, below the previous auction's 4.3 times; and the scaling factor was 46.9925%.

The market interpreted the auction as disappointing, and there was renewed volatility in the gold price immediately after the results were announced. Gold's initial response was to move lower, with the price dropping back to $283. Physical demand proved firm as the lower levels were reached, however, and the early losses were reversed as short-covering was suddenly triggered after the New York opening. Gold moved quickly above $285, and bounced up to the $290 level by the close of US trading. Prices remained well-supported during early trading on Wednesday, with gold fixing at $289.40 in the morning. The afternoon saw the market begin to sag again as follow-through buying failed to emerge, however, and by Thursday morning quotations had dropped below $287. The US opening brought renewed fund selling, and the fall in prices accelerated with gold touching $283.50 bid before uncovering support. The market steadied at the lower levels on Friday, holding above $284 throughout the European session and closing the week in New York at $284.80/285.30.

Commodity Futures Trading Commission statistics for the two weeks ended March 21 showed a modest fall in the net long position of the large speculators on Comex, down from 18,671 contracts (58.0 tonnes) to 14,933 contracts (46.4 tonnes). Total open interest over this period edged up slightly from 161,362 contracts to 164,397 contracts, but has since dropped back to 157,920, suggesting that further long liquidation may have taken place. Gold lease rates gave up the previous week's gains, indicating that market liquidity remains plentiful, especially for short-dated deposits; the one-month rate slipped from 0.39% to 0.31% over the week, while the 12-month rate moved down marginally from 1.41% to 1.40%.

This morning (Monday March 27), prices came under further downward pressure as a report in the Sunday edition of the French newspaper Le Monde aroused speculation about the possibility that the French government might be considering the sale of some of the country's gold reserves. The newspaper reported that Henri Emmanuelli, head of the finance committee of France's National Assembly, had suggested to Prime Minister Lionel Jospin that a portion of the gold reserves of the Banque de France might be used to cover future shortfalls in the pension system. There has so far been no confirmation from either participant that the conversation as reported took place, nor any indication of what the official response to a proposal along these lines might be. The French government is well-known as a firm believer in the role of gold as a reserve asset, and, as a signatory to the Washington Agreement on Gold, the country is bound by the limits imposed under that accord.

Prior Week Archive: (March 13 - March 17, 2000)

Market activity fell away sharply last week as traders focussed their attention on the forthcoming UK gold auction, due on March 21. This is the fifth 25-tonne auction and will mark the end of the first part of the UK's gold sales programme. The next series of auctions starts in May. Gold started the week little changed, fixing at $289.65 Monday morning and edging gently above $290 later in the day. Quotations continued to firm quietly on Tuesday morning, touching a high of $291, but the US opening uncovered no fresh interest and the emergence of light fund selling was enough to push gold down to $288.75 at the PM fix.