Newspaper article THE JOURNAL RECORD

Precious Metal Futures Prices Tumble

Newspaper article THE JOURNAL RECORD

Precious Metal Futures Prices Tumble

Article excerpt

Gold futures prices sank to 12-year lows Monday after Australia sold 68 percent of its gold reserves, igniting concerns other nations will do the same.

Silver futures tumbled 6 percent on gold's retreat. Platinum and palladium futures also fell sharply after Russia announced large shipments of the precious metals were on their way to Japan for the first time in seven months. On other commodity markets, grain and soybean futures retreated.

Gold futures prices fell in the wake of the Reserve Bank of Australia's announcement that it had in the past six months sold 167 tons of gold to buy U.S., Japanese and German government bonds. The news added to long-held concerns about central bank sales in Europe. Switzerland, Germany, Belgium and the Netherlands this year have announced they have or plan to sell part of their reserves. The root of gold's problems has been stabilizing inflation rates around the world. The precious metal for centuries has been prized because it holds its value better than other currencies in times of economic turmoil. But the value of consumer goods has been rising only modestly recently, helping keep high inflation and economic instability at bay. Gold prices have fallen at an astonishing rate in response, particularly since other investments such as stocks and bonds provide more attractive returns. "The world is generally reassessing the need to hold gold in reserve, given the lack of inflationary pressures in the modern financial system," said analyst Stephen W. Platt at Dean Witter Reynolds. "(Central banks) can earn higher rates of return on their investments elsewhere, and there's plenty of above-ground supplies if there ever is heightened demand." The decline, which some analysts said could fall as low as $285 an ounce, could cause serious ripples in countries whose economies rely on gold mining, particularly South Africa, because production likely will be curtailed sharply in coming months. …

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