Tension boosts gold price

Press, 26 March 1981, Page 18

Tension boosts gold price

NZPA-Reuter London Concern over continuing tension in Poland pushed up the price of gold and silver as investors switched their money into precious metals, the traditional financial haven in times of crisis.

Gold rose more than $8 an ounce to more than $540. and the United States dollar dropped about 1.5 c to 2.2660 against sterling, and half a pfennig to 2.0815 marks. Poland's Solidarity free trade union leaders have called for a four-hour national strike tomorrow, and an indefinite general strike from next Tuesday.

Bullion dealers said that the main factor pushing gold up was worry about Poland, but foreign exchange dealers said a cut in prime interest rates by several leading United States banks to 17 per cent contributed to a drop in the value of the dollar. Among the biggest banks, half-point reductions were announced by the secondlargest, Citibank, number

five, Morgan Guaranty Trust, number nine, First National Bank of Chicago, and number 10, Security Pacific National Bank, in Los Angeles. Several important regional banks followed suit.

The prime is the rate banks usually charge on loans to their most creditworthy corporate customers. and rates on most other business loans are scaled upward from it. The "prime'’ last stood at 17 per cent late last November, when the key rate was climbing rapidly towards its record peak of 21.5 per cent on December 19.

Silver prices, which fell 50c on Tuesday to $12.70 an ounce as investors panicked about the possibility’ that the Hunt brothers might sell their huge holdings, recovered as the gold price rose and a Hunt sale appeared unlikely. London bullion dealers said that most of the buying that pushed the price up came after the North American markets opened.