European banks hold back on gold sales

While buying gold has become a market obsession in recent months, selling gold has not been as rampant – with central banks notably light-weight on November sales.

A big player in the Central Bank Gold Agreement (CBGA), the European Central Bank (ECB) announced a decrease of only €53 million ($78.6 million) in gold from European signatories of the pact for the week ending November 16th 2007.

The ECB claimed that the transactions reflected a move to sell gold by one Eurosystem central bank and a compensatory net purchase of gold coin by another, making the overall net sale of three tons.

This comes after the sale of only 3.6 tons the previous week, marking a steady decline in quantities sold since sales of 10.6 tons were reported early in November.

World Gold Council figures from 2006 showed that European central banks held as much as 39 per cent of bank-held gold, with around one fifth of global supplies held by the institutions.

When CBGA deadlines ran out for yearly sales not long ago, European and other central banks reportedly held back from fulfilling the quota of potential sales – confounding expectations in the bullion market.