Gold Hits New Record Above $1,080 After IMF Gold Sale
Source: Mineweb, Geoff Candy (11/3/09)
"While the IMF gold sale failed to ignite gold traders in Asia or Europe, the U.S. took the news rather well"
The sharp move upwards comes on the back of an announcement on Monday that the International Monetary Fund had sold 200 tons of gold to the Indian central bank.
The news failed to ignite gold traders in Asia or Europe but clearly caught the eye of the North American gold market—gold is currently trading at around $1,078 .48 an ounce, below the intraday peak but still comfortably above its previous best of $1,070.40 struck on Oct. 14.
Perhaps it just took a while to sink in. Initial reactions to the news were positive especially because the safe money had been on China to take up the bullion on offer by the IMF. And, many punters took this as a sign that it wasn't just Beijing that was considering diversifying its holdings into assets other than the U.S. dollar.
"Central banks in India and China will be happy to accumulate gold at these levels," said Aaron Smith, Asia head of the $1.65 billion technical trading fund Superfund, "I will not be surprised to see even some Southeast Asian banks buying gold."
According to the IMF the sale involved daily sales that were phased over a two-week period during October 19–30, with each daily sale conducted at a price set on the basis of market prices prevailing that day.
The big question now is, who will be the buyer of the other half of the IMF's gold stash? Especially because it said in a release "under the Fund's Articles of Agreement, all gold sales must be conducted at prices based on market prices, including direct sales to official holders as in the case of this transaction."