Gold jumps to $426

Press, 11 July 1983, Page 14

Gold jumps to $426

PA New York The price of gold rose suddenly and sharply on Friday as rumours concerning Brazil and the Soviet Union swept through the bullion markets. The rumours sparked nervous trading that boosted gold bullion to a high of SUS43S dollars an

ounce in early afternoon before it fell back to $426 as trading calmed. The previous close was $413. Dealers said some traders might have over-reacted to a report quoting diplomatic sources in Paris that differences between Brazil and the International Monetary Fund were overshadowing a meeting of the Organisation for Economic Co-operation and Development finance ministers. The market reacted to rumours that Brazil was unable to continue servicing its foreign debts, estimated at around SUS9O,OOO million, dealers said. The initial burst of buying triggered more covering of short positions by traders in a self-

feeding cycle, they said. Banking sources said there was nothing to indicate that Brazil was encountering new difficulties with its foreign debts. The rumour contributed to a fall in the dollar to 2.5650 marks in mid-after-noon, about one pfennig down on midsession, amid concern about the exposure of U.S. banks in Latin America, foreign-exchange dealers said. The market’s nervousness was heightened when rumours emerged that a Soviet leader had died, but dealers said the late profittaking showed that the market placed little credence in those rumours.