New York Times article on gold hedging

Section:

12:05p EST Sunday, December 5, 1999

Dear Friend of GATA and Gold:

Here's Friday's bad news, from Reuters.

CHRIS POWELL, Secretary
Gold Anti-Trust Action Committee Inc.

* * *

Gold Tumbles to 10-Week Low

Friday, December 3, 1999

By Marius Bosch

LONDON (Reuters) -- Gold prices tumbled on Friday to
2-1/2-month lows, dipping below $280 a troy ounce as
investment funds sold out of long positions, before
gold recovered slightly.

By 9:15 a.m. EST, spot gold was down $2.50 at
$282/$283 compared to the New York close at
$284.50/$285.50.

Bullion fixed at $280.85 in London on Friday morning --
its lowest fix since September 24 this year -- and spot
prices were quoted as low as $279.00 bid, the lowest
since September 27.

Dealers said a wave of fund selling in a thin European
market saw gold breaking below the $282.00 level which
triggered technical selling.

"It looks like it is fund-selling and it has whacked
the market down from $284 to $280," one dealer said.

All gold's gains made after 15 European central banks
pledged on September 26 to limit gold sales, lending
and derivatives activity, have now been wiped out,
traders said.

Gold equities weakened on the back of the lower gold
price with South Africa's Gold Index down 1.64 percent
by 1415 GMT. The Australian Gold Index ended 1.64
percent down on Friday.

The central bank pledge helped push prices to a two-
year high of $338.00 on October 5.

Market Sentiment Remains Negative

Dealers and analysts said market sentiment remained
negative after this week's third British gold auction
with perceptions that interest in the sale was weaker
than at the previous sale on September 21.

Monday's sale was only 2.1 times oversubscribed,
compared to the eight times oversubscription at the
previous auction which drew broad participation from
jewelry makers to major gold miners needing metal to
cover maturing hedge positions.

Sharp currency fluctuations in the euro, which hit a
lifetime low against the dollar on Friday and a
stronger Japanese yen did not help the outlook for
gold.

"People are looking at the currencies as well.
Altogether the external picture is not conducive for
gold and the internal picture as well is
questionable," one London analyst said.

Physical demand was lending some support to keep the
price supported, said metals analyst Rhona O'Connell of
stockbrokers T Hoare Canacord.

"Physical demand in the Far and Middle East and to some
extent also in Europe is helping to provide a
stabilizing element but for the time being at least the
bears have the upper hand," O'Connell said.

But some dealers said they had seen very little buying
interest in gold over the past couple of days.

"The producers are pretty much out of it in terms of
buybacks, the central banks have said they are not
going to do any more selling, and yet we are now $60
off those (October) highs and falling.

"The question now is: Who on earth is going to buy
it?," the dealer said.