Gold News

Quota date approaches for Central Bank gold sales

With reports of two Euro-system central banks selling gold reserves amounting to around 3.8 tons, the gold market is preparing itself for potential further offloading before the 27th September quota date.

Resource Investor reported European sales equating to $83 million worth of gold for the week ending September 7th, suggesting that central bank reserves may be preparing to flood the market.

Current agreements on gold reserve sales link the European Central Bank and 14 others, each of which has agreed to respect the current annual quota of 500 tons for a five-year period.

Increased gold sales before the deadline are seen as highly likely with figures from the World Gold Council (WGC) showing that only 294 tons of gold had been sold by June 12th 2007.

But with the deadline approaching and gold sales likely, not all experts are pessimistic about the likely repercussions for the gold market.

Steve Shepherd, gold analyst at JPMorgan Precious Metals Research, told Mining MX that "there is a risk that they will accelerate sales as they approach the end of the third year of the agreement but our view is that this won't have a significant impact on the gold price".

Analyzing above ground stocks of the precious metal in 2005, the WGC estimated 18 per cent of gold to be held in central banks, a higher percentage than is stocked in bullion investment.

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