Central bank gold sales fall short of quota

Data has shown that European central banks sold below 500 tons on gold in the third year of the Central Bank Gold Agreement (CBGA), raising hopes for further rises in the price of gold infuture months.

The Bank of International Settlements said that the central banks pertaining to the CBGA, have sold 475.75 tons of gold in the third year of the agreement, which ended on September 26th.

The CBGA agreement stipulates that total gold sales cannot exceed 500 tons for the twelve month periods stretching from one September 26th to the next, with late gold sales from the Spanish and Swiss central banks still not bringing the agreement countries up to the quota level.

Higher gold sales from central banks threatened to rock gold bullion investors by having a destabilising effect on prices, but central banks refrained from following through with big last-minute sales.

One fifth of all the world's mined gold is held as reserves by central banks, although this amount is slowly declining as more gold is mined and some reserves are sold.

Strong gold prices through September were enough to put paid to fears of price destabilisation from central bank sales, with the slowdown in the last week before the CBGA deadline allowing bullish investors to now feel even more confident.