Gold prices plummet 5 percent

October 25, 1997|By BLOOMBERG NEWS

NEW YORK -- Gold plunged to a 12 1/2 -year low yesterday after a Swiss government panel recommended selling half the country's reserves, the fifth largest in the world.

While the Swiss government rejected the report, it reiterated a proposal made earlier this year to sell about 400 tons of gold over several years to establish a fund for Holocaust victims.

"The fact the Swiss are talking about selling at all will encourage other people, central banks and investors, to try and get out of the door first," said Jeffrey Ralph, a trader at Royal Bank in Toronto.

The Swiss report was another blow for gold, which sank in July after Australia said it sold two-thirds of its reserves.

The Swiss panel recommended the sale because the nation no longer needs to back its currency with gold.

Gold for December delivery fell $16.10, or 5 percent, to $308.60 an ounce on the Comex division of the New York Mercantile Exchange. It was the lowest price for gold since March 18, 1985. Gold is down 17 percent so far this year.

Gold is losing its status as an alternative to financial assets.

"During a crisis there's not a flight to gold. Investors moved money to bonds and currencies," said William O'Neill, an analyst at Merrill Lynch & Co. in New York.

Pub Date: 10/25/97

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