Gold drops as possible IMF sales weigh

Gold drops as possible IMF sales weigh
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First Published: Tue, Feb 26 2008. 09 43 AM IST
Updated: Tue, Feb 26 2008. 09 43 AM IST
Singapore: Gold extended falls on Tuesday after the US Treasury said it would support gold sales by the International Monetary Fund, which holds more than 3,000 tonnes of bullion.
The Treasury had resisted seeking congressional approval for the gold sales until the move was tied to an IMF cost cutting plan, and has enough votes in the Fund to block any sales.
Platinum retreated as investors booked profit from last week’s record high, palladium was below a 6-1/2-year high and silver held near its best level in 27 years.
Gold fell to $934.00/934.80 an ounce from $937.80/938.60 an ounce late in New York on Monday, but remained within sight of last week’s historic high of $953.60 an ounce.
“In my opinion, the IMF gold sales will not push the price of gold down, but psychologically, it might,” said William Kwan, a dealer at Phillip Futures in Singapore.
The IMF is the world’s third-largest gold holder, with 3,217.3 tonnes tonnes of bullion reserves. The last IMF gold sales in December 1999 and April 2000 were not put through the spot markets.
“IMF gold sales will not flow into the physical market. It only transits from one central bank to another. That’s all,” said Kwan.
Any sale of IMF gold would also be done in accordance with a European central bank gold accord, which limits total gold sales to 500 tonnes a year.
“If there’s no follow through on the downside for gold, I think it’s a good chance for investors and small specs to buy on margins,” said Kwan.
“The upside is still $950. Once it’s broken, I can tell you gold could see $1,000,” he said
The dollar was steady at 108.05 yen while the euro was barely changed at $1.4825 near a three-week high of $1.4863 struck on electronic trading platform EBS on Friday.
“Gold bulls have the solid near-term technical advantage and are looking for more on the upside in the near term,” said Pradeep Unni, analyst at Vision Commodities in Dubai.
“$950 is more of a psychological resistance, which could be easily taken out in the coming days,” he said.
Spot platinum fell to $2,131/2,138 an ounce from $2,135/2,145 an ounce and off last week’s record high of $2,192 an ounce.
Japanese platinum futures were also off record highs. The most active December contract on the Tokyo Commodity Exchange ended the morning session 41 yen per gram lower at 7,148 yen.
Palladium fell to $515.00/520.00 an ounce from $520/525 an ounce late in New York.
Silver edged up $18.08/18.13 an ounce from $18.07/18.12 an ounce, not far from a 27-year peak of $18.15 hit on Monday.
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First Published: Tue, Feb 26 2008. 09 43 AM IST
More Topics: Markets | Precious | Gold | Platinum | Silver |