Gold News

Gold closes London unchanged at $690; row over Britain's gold sales rolls on

Spot gold prices closed Wednesday in London at $690 per ounce, unchanged from the morning's open.

Gold had earlier pushed up above $690 per ounce for the fifth time this week after slipping 0.5% to $686.50 during the first half of European trade.

Versus the other major currencies, gold's bounce was faster still. It closed London trade near the day's against both Sterling and Euros.

"Sentiment is still particularly bullish," reckons Darren Heathcote, head of trading head at Investec Bank in Sydney.

"There has been no change to the fundamental factors...The market is aiming at the $700 mark."

Tuesday's inflation data in both the UK and United States look supportive for gold in the longer-term.

Unless the Bank of England and US Fed raise their interest rates sharply, further depreciation of both the Pound and Dollar looks certain. (Click here to read more...)

At the Tocom in Japan overnight, gold for delivery in Feb. '08 rose to the equivalent of $696 per ounce today.

Comex gold futures for June delivery gained 0.3% to $694.50 by the start of London trade.

"The consensus is that [spot gold] will test the $691 area again before long and some people are very reluctant to short it at present," says Heathcote.

"There will have been some buying on the dips this morning."

In gold mining news, Lihir Gold – the Papua New Guinea miner – said Tuesday that it's closing its hedge book, currently worth 934,500 ounces.

Lihir also wants to repay a gold loan of 480,000 ounces, according to

That creates a total of 28 tonnes of physical gold that Lihir needs to find on the open market.

Gold supply has also been restricted by the central banks of Europe according to the latest data from Frankfurt.

The European Central Bank (ECB) says that last week saw just one bank sell only two tonnes of gold under the terms of the Central Bank Gold Agreement.

Over the previous month, total sales reached 57 tonnes – an average of more than 14 tonnes per week. (How far can gold sales by the European central banks influence the gold price? Click here to find out...)

And meantime in London, the row over Gordon Brown's sale of 415 tonnes of the UK's gold between 1999 and 2002 rolls on.

Wednesday's Telegraph quoted Peter Hambro – head of the eponymous gold mining firm – as saying that the Bank of England may have put the nation's remaining gold reserves at risk by leasing them out to investment companies.

"It is very important to know whether the bank's gold lending is on a secured basis," says Hambro.

"The whole point of gold is that it's not somebody else's paper currency. It's the stuff that keeps you alive when everything else goes wrong."

If you're looking for an asset that is no one else's promise, no one else's liability, be sure to consider physical gold – owned outright in your name alone.

The vast majority of gold traded today is done so "unallocated" – leaving the buyer with the very credit risk they're often trying to defend against!

For the full story about unallocated gold, click here and read more now...

Adrian Ash

Adrian Ash, BullionVault Gold News

Adrian Ash is director of research at BullionVault, the world-leading physical gold, silver and platinum market for private investors online. Formerly head of editorial at London's top publisher of private-investment advice, he was City correspondent for The Daily Reckoning from 2003 to 2008, and he has now been researching and writing daily analysis of precious metals and the wider financial markets for over 20 years. A frequent guest on BBC radio and television, Adrian is regularly quoted by the Financial Times, MarketWatch and many other respected news outlets, and his views from inside the bullion market have been sought by the Economist magazine, CNBC, Bloomberg, Germany's Handelsblatt and FAZ, plus Italy's Il Sole 24 Ore.

See the full archive of Adrian Ash articles on GoldNews.

Please Note: All articles published here are to inform your thinking, not lead it. Only you can decide the best place for your money, and any decision you make will put your money at risk. Information or data included here may have already been overtaken by events – and must be verified elsewhere – should you choose to act on it. Please review our Terms & Conditions for accessing Gold News.

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