Gold Price Fluctuations Tied to Swiss Sales, U.S. Unemployment Stats

May 12, 2000

Gold Price Fluctuations Tied to Swiss Sales, U.S. Unemployment Stats

After falling to $272 per ounce this week as U.S. traders reacted to the start of the Swiss National Bank's gold sales program, gold prices recovered. SNB said it started to sell its gold May 1, intending to unload up to 120 tons by the end of September. This is in line with the limits imposed by the Washington Agreement on Gold. No details were given on how much had sold so far, but it was confirmed the Bank for International Settlements had been commissioned to conduct the sales.

According to the World Gold Council, the market viewed the well-publicized sales as being factored into prices, and was reassured the WAG framework was being adhered to.

Strong U.S. employment statistics were released today, showing the jobless rate falling to 3.9%, the lowest level since January 1970. Gold promptly spiked to $282 on fund buying, but encountered strong producer selling which reversed gold's course. In active trading, quotations dipped to $276 before closing the week at $278.70/279.20.

Next week's gold pricing may be dominated by U.S. interest rates, which some market participants anticipate an aggressive 0.05% hike to cool mounting inflationary pressures.

- by Mark E. Dixon