Gold price slumps

Press, 17 March 1982, Page 30

Gold price slumps

NZPA-Reuter London The price of gold hit a 2 lz a year low of $U5311.50 an ounce in London yesterday but later trading in New York brought it back to Friday's European levels. Dealers said turnover in gold was high with buyers as well as sellers in the market, but they thought the price could soon drop to SUS3OO

dollars. “What happens then is anyone's guess/’ one London analyst said. Gold declined as the dollar held firm on currency exchanges because of expectations that U.S. interest rates would remain high. The high returns available on dollar investments are seen as one factor causing widespread disillusionment

with gold among investors. They are also worried about reported sales by gold producers, Middle East nations seeking funds because of lower oil prices,' and East European countries, especially the Soviet Union. In Europe, gold recovered from its low point to close, in London at $U5313.62 an ounce, SUSIO down on Friday, and $U5312.50 in Zurich.

It later rose to $U5324.25 in New York. Gold, which reached a peak of SUSBSO in January, 1980, has been steadily declining from around SUS4OO an ounce at the beginning of the year.

The dollar closed in London at 2.3725 West German marks, up on its midday level of 2.3670 but below the 2.3775 rate of Friday. Currency dealers said that the French franc weakened in forward dealings because of speculation about a possible realignment of currencies in the European Monetary Ststem in the next few months.

Under the E.M.S., countries of the European Economic Community, except Britain and Greece, allow their currencies to fluctuate against each other within set limits.

The spot rate for the franc against the dollar was little changed yesterday, closing at 6.0935 to the U.S. currency