Gold Rises Despite IMF's 32-Ton Sale


"Almost a third of the latest sale was to yet another Asian country."

The gold price managed its big upward move in September despite signs that the IMF is managing to accelerate its gold sales program—and the price has held up well in October in spite of the continuing IMF sales program.

According to a Reuters report, the IMF said it had sold no less than 32.3 tons of gold in September under its announced sales program to release 403.3 tons onto the market. India very much started the ball rolling with a purchase of 200 tons in late 2009 and a number of other Asian countries purchased much smaller amounts for their reserves, as well. Almost a third of the latest sale was to yet another Asian country—this time Bangladesh—which bought 320,000 ounces (~10 tons).

The latest sale leaves the IMF with about 70 tons to sell (less whatever it may have already sold in October); and if sales continue at around September's level, the Fund will be able to complete its sales by the end of the current year or early next.

Assuming central banks remain net buyers (rather than net sellers, this should give yet another psychological boost to the gold price once the IMF sales program is completed.

The IMF's October sales data will be awaited with interest to see if the sales momentum remains at this relatively high level, or slips back as investors assess the likely impact on future gold prices. Now, with the market absorbing the IMF sale and continuing to rise despite other investors taking profits suggests we may well see higher prices by year-end. Recent history suggests that October is not one of the best months for gold, but November and early December tend to see rises. It will be interesting to see if the current year follows the same pattern.

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