Sales curbs drive gold above $300

THE PRICE of gold surged through the key $300 barrier for the first time since October 1998 as the markets continued to celebrate the decision by Europe's central banks to curb their sales plans. The metal's spot price hit $305.1 an ounce, a $23 or 8.5 per cent rise on the previous close, after a 4 per cent rise on Monday. Gold is now almost 20 per cent up on the $255 price the UK secured at its last auction.

Mining shares rose sharply across the world for the second successive day. The South African Gold Index leaped by 17 per cent and Australian gold shares gained 7 per cent. In London, shares in Anglo American were up 1.6 per cent.

"The agreement largely removes the single most damaging threat to the gold market, that of uncertainty of central bank sales," said Flemings Global Mining Group in a report. The 15 central banks said on Sunday they would limit annual sales to 400 tonnes for the next five years. The UK will still be able to go ahead with its sell-off of 415 tonnes, but will rake in more money than it expected. The next 25-tonne auction is on 29 November.

The UK gold sale announcement on 7 May sparked a massive sell-off, with the gold price reaching a 20-year low of $251.70 a month ago. Meanwhile platinum hit its highest level for 16 months, while copper and silver also rose.