Gold price ready to shine

GOLD prices are about to surge as the world's central bankers prepare to renew a 'ceasefire' on sales of their own bullion reserves. The present deal, agreed in Washington in September 1999, expires in 2004, but talks behind the scenes suggest it will be extended, or even made permanent.

'There is every indication of a renewal,' World Gold Council chief executive Haruko Fukuda said. 'The agreement is likely to be enhanced and to go forward for another five years - or for ever.'

Already last week, bullion prices hit a two-year high. Gold closed at $303 a troy ounce in London, up from $301 midweek. The price has risen from just above $260 since 11September.

In the Washington deal, 15 European central banks, including the Bank of England, agreed a five-year moratorium on gold sales. The US Federal Reserve, the Bank of Japan and the International Monetary Fund supported the deal.

It came in response to the plunge in bullion prices after a number of high-profile sales of gold reserves, notably by Switzerland and Britain. With gold at its lowest in real terms since the early Seventies, producers such as South Africa, Zimbabwe, Russia, Indonesia and Brazil faced growing problems.