Gold Prices Fall as Soviets Snub Ruble Reforms

Gold futures prices fell sharply Wednesday on New York’s Commodity Exchange as the Soviet Union rejected reforms that many investors had hoped would lead to a gold-backed Soviet currency.

Futures prices of silver and platinum also plunged, frustrating speculators in the increasingly volatile precious metals markets.

Gold futures fell $9.80 to $10.80, with the contract for delivery in December settling $9.80 lower at $408.10 an ounce; silver finished 12.8 to 13.8 cents lower on the Comex, with December at $5.544 an ounce.

On the New York Mercantile Exchange, platinum futures sank $13.70 to $14.10, with the January contract settling at $504.70 an ounce.

From mid-October through late November, gold soared from near $360 an ounce to almost $420, partly on ideas that the economic changes sweeping Eastern Europe would include a move by the Soviet Union to back its currency, the ruble, with gold.

Such a move would greatly increase the ruble’s value on the world market, where it is now almost useless, facilitating trade with other countries.

A gold-backed ruble apparently was not discussed by the Soviet Parliament Wednesday, but they rejected other radical economic reforms, disappointing gold traders who had hoped for some strong indication of change, analysts said.

Analyst James Steel of Refco Inc. in New York said the gold selloff also appeared linked to reports that Soviet leader Mikhail Gorbachev had threatened to resign. The report “has shaken confidence in people who bought gold” on speculation of Soviet reform, he said.

Gold fell in London to a late bid price of $411.25 an ounce from $417.50 Tuesday. In Zurich, Switzerland, gold slipped to $411.00 an ounce from $416.75.

Earlier, in Hong Kong, gold fell $1.08 to close at a bid $414.73 an ounce.