Gold steady after surge, but IMF sale plan cuts further gains

Gold steady after surge, but IMF sale plan cuts further gains
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First Published: Thu, Apr 10 2008. 11 52 AM IST
Updated: Thu, Apr 10 2008. 11 52 AM IST
Reuters
Tokyo: Gold maintained its strength on 10 April after surging more than 2% a day earlier as record high crude oil prices and the dollar’s weakness prompted buying by investment funds.
Firmness in Japanese gold futures prices gave support to cash gold, but traders were reluctant to chase prices higher amid wariness over a plan by the International Monetary Fund to sell around 400 tonnes of its gold.
Asian investors were also unwilling to trade actively before a series of earning results by US financial institutions next week, traders said.
“Underlying sentiment for precious metals is strong due to oil and the dollar, but the IMF sales plan and uncertainties in the financial sector are giving psychological pressure,” said Hiroyuki Kikukawa, an analyst at IDO Securities in Tokyo.
“At the moment, demand by jewellers and other end-users is weak due to high prices, but funds are still looking for a chance to shift into gold for safe-haven purposes,” he said.
By 08:10am, gold was little changed at $931.70/932.50 an ounce from $932.50/933.30 late in New York a day earlier.
Analysts said the market would absorb the possible selling of gold by the IMF, which is expected to take place in a controlled manner.
The market is keen to see details about how and when the IMF would sell, which could be discussed at the G7/IMF meeting this weekend, traders said.
The IMF is the world’s third-largest gold holder after the United States and Germany, with 3,217.3 tonnes in stock. It wants to sell 403.3 tonnes and use the profits to invest in government and corporate bonds, and possibly equities.
The dollar fell broadly on 10 April as the market focused on interest rate differences, with the European Central Bank meeting later in the day and likely to keep rates steady.
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First Published: Thu, Apr 10 2008. 11 52 AM IST
More Topics: Gold | Precious metal | US Fed | IMF | Money Matters |