Gold Punters Milking Fear, Says Wgc

Large investment speculative funds are taking advantage of fears in the gold market of further sales by central banks to drive the world gold price lower, the World Gold Council (WGC) industry group said on Tuesday.

"I talk to several of the large speculators on a regular basis and there is no doubt in my mind that they are taking advantage of the market's fear of central bank sales to bully the gold price down and make huge profits," WGC manager of gold market analysis George Milling-Stanley said in a speech to be delivered at the Diggers and Dealers mine conference on Tuesday. "That is what lies behind the current weakness in the price." The speculators sell gold they did not own in order to drive down the price so that they could "buy back" their positions and take a profit, Milling-Stanley said. He said speculative activity in the over-the-counter gold market was many times greater than what was visible on the world's gold futures exchanges.

Short positions reached all-time records in the first weeks of July after an announcement by the Australian central bank it had sold 167 tonnes of bullion over six months.