I.M.F. sales depress gold price

Press, 22 July 1976, Page 18

I.M.F. sales depress gold price

NZPA-Reuter London The decline in the price of gold gathered pace on the London bullion market on Tuesday when it had one of its sharpest falls on record. The price of an ounce of gold fell about SUS7.OO to $107.00 at the end of the day.

Heavy selling pushed the price as low as $105.50 at midday. It was set at $llO at the morning fix, and $107.75 in the afternoon. '

The collapse of gold prices since last Wednesday’s second International Monetary Fund auction is bad news for many countries, both rich and poor. [ The drop means less imoney for the I.M.F. trust fund to help developing countries, which is to be financed from the profits on sales of 25 million ounces of gold over four years.

There are also adverse implications for South Africa, as the world’s biggest gold exporter, for financially hard-pressed Italy, and for France, which holds a high proportion of its reserves in gold, which are being used to ward off a speculative assault on the franc.

The sharpness of the decline took dealers by surprise. The almost total lack of buyer interest contrasted dramatically with gold's dizzy climb at the end of December, 1974, when the price briefly hit $2OO, and

investors thought the sky was the limit.

That was just before the 41-year-old ban on gold ownership by United States citizens was revoked — and the anticipated gold-rush failed to materialise. Gold has not looked like a good investment for eighteen months. The decline in world inflation rates and the revival of stock have caused! gold to lose appeal as al store of value. Actions by the I.M.F. to' reduce gold’s role in the international monetary system has also depressed the free market price. The prospect of continuing regular I.M.F. auctions — the next one is set for September 15 — has been a [particular blow to investors’ confidence in the price of metal,