Saturday, 4 April 2009

IMF sell gold - Bad news for gold - I am happy

IMF sale will hit gold price

New Delhi/London, April 3: Gold prices are expected to slump by five per cent before the end of this month to $855 per ounce as leaders of G-20 nations agreed on Thursday that the International Monetary Fund should sell gold from its reserve to help stimulate the world economy.

Analysts say the prices may dip further by June once the supply of the precious metal rises due to sale by the IMF. The IMF can sell up to 403.3 tonnes, which is the equivalent of one-eighth of its holdings.

Already, spot prices of gold at the London Metal Exchange fell to $902.5 per ounce, down by 0.17 per cent from the previous close, due to the announcement by the G-20.

"We have started to see impact of the decision and the fall will continue. I expect the prices to come down to $855 an ounce before the end of April and it may dip further to $810 on or before June," said Mr Ashok Mittal, the vice-president and country head (India) of Karvy Comtrade.

"Gold prices will suffer as there is no consumer demand in India but only investment-side demand. If the supply rises and demand remains low, the prices will slump," he said.

In a communique, the G-20 said: "Additional resources from agreed sales of IMF gold will be used, together with the surplus income, to provide $6 billion additional concessional and flexible finance for the poorest countries over the next 2-3 years."

Demand for gold in India, the largest importer of the precious metal, has taken a knock, evident from the fact that the country has not purchased gold from the overseas market in the last two months.

Gold prices in the spot market tumbled by Rs 350 per ten gm to nearly one-and-a-half month low of

Rs 14,900 in the Delhi bullion market on stockist selling triggered by the annou-ncement. — PTI

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