Now comes information that Gold Fields, the second-largest mining company in South Africa, had put on hold all exploration and expansion plans and dug trenches at $230 per ounce to ward off declining prices. Overall, it seems that most of the miners have made the $230 per ounce region as gold's Magiontte Line. With the major mining companies in a state of red alert, will the smaller and fringe mines survive or close down rapidly? Thus, any rally in gold prices is fraught with the dangers of producer selling. It makes therecovery process very painful and slow. It is more like walking through a mine field using a mine detector, one step at a time. The yellow metal had a taste of things to come as it failed to cross the $258 per ounce mark in the middle of the week. It nudged past the $257 per ounce but was repulsed by producer selling at $258 per ounce. A weak US dollar and fears about inflation in the US were said to be the main reasons for gold's recovery. Analysts opine that gold was not sufficiently strong to cross the $258 per ounce barrier. There was stop-loss buying all the way to $258 per ounce.

Gold is expected to be in the $254-258 per ounce range. However, analysts feel that should gold pierce through $259 per ounce it could well bounce up by about $6-8 per ounce in a short while.

Silver seems to have run out of steam for the time being. The white metal waltzed past the US "550 per ounce mark to scale "555 per ounce on August 3. But analysts forecast a choppy future for silver, they opine that should silverpush through "559 per ounce it could well scale the year high of "580 per ounce.

The CPM group from New York opines that silver was finding a higher base near the "510-520 per ounce region. However, "560 per ounce could attract heavy profit taking the research outfit warns. It seems that only a major offensive could take the white metal past the year high of "580 per ounce.Friday saw gold at $255.75 per ounce while silver languished at "538.50 per ounce (gold and silver, London, Friday afternoon fixed).

Elsewhere, in the domestic bullion markets, standard gold vacillated between Rs.4,040-Rs.4,070 per 10 gms but remained unchanged from its July 30 level of Rs.4,060 per 10 gms. Silver .999 was more volatile as it swung from Rs.8,250 per kg to Rs.8,310 per kg before stabilising at Rs.8,210 per kg (gold and silver, Mumbai, Saturday evening prices).

Meanwhile, a Reuters poll amongst gold analysts saw most analysts predicting an average gold price of $257.70 per ounce. Most analysts believe that gold wouldnot budge from the current levels in the $250-260 per ounce range. Some analysts predicted doomsday while others were surprised that there were no mine closures as yet.

The lack of expected demand at lower prices has also baffled many. But there are still die-hard gold analysts who forecast that the longer gold stays near 20-year lows, the higher it will rebound. They have predicted gold prices to recover to $350 per ounce in 2000. Others expect a fall-out of the Y2K scare to help gold on the comeback trail.

The same bunch of analysts had at the beginning of the year predicted that gold would reside in the $310-265 per ounce rang.

The villain in the story (according to gold buffs) is the Bank of England, it all boils down to the unexpected sale by the BoE. And to think that the BoE governor was actually against the sale of gold!