By Javier Blas in London
Published: December 22 2010 00:21
The International Monetary Fund has said that it has completed its large programme of gold sales, removing one of the few bearish elements restraining the bullion market.
In a statement released on Tuesday night, the Washington-based IMF said that it had already sold the expected 403.3 tonnes of gold – equal to around 10 per cent of annual demand for bullion – partly through direct sales to central banks, including one large disposal to the central bank of India, and partly on the open market.
Gold prices were little changed after the announcement. In late trading in London, bullion traded at $1,385 a troy ounce, up 0.1 per cent from Monday’s last quote.
Gold prices have surged 26.5 per cent since January, hitting a nominal all-time high of $1,430.95 an ounce earlier this month.
However, in real terms, adjusted by inflation, gold prices are far below the peak set in 1980 of more than $2,300.
The completion of the disposals – around one-eighth of the IMF’s total gold reserves – comes slightly ahead of initial expectations, but the IMF has accelerated its selling programme amid record high prices.
The conclusion also means that in 2011, barring a surprise sale by any European central banks, governments and other official institutions will be net buyers of gold for the second year in a row.
GFMS, the London-based precious metals consultancy, estimates that the official sector was a net buyer in 2010 for the first time in two decades in spite of the sales by the IMF. The shift marks a turnround after heavy disposals by European central banks over the past 10 years, when gold was seen as a non-yielding unattractive asset. Monetary institutions then swapped their bullion for yielding sovereign debt.
The consultancy, which compiles benchmark statistics for gold supply and demand, said that central banks would buy about 15 tonnes of bullion on a net basis this year, a situation last seen in 1988.
The swing comes on the back of buying by Russia and several Asia-based central banks and the collapse of sales in Europe.
The IMF did not disclose how much money it raised, although noted that “all gold sales were at market prices, including direct sales to official holders.” At current prices, the gold sold is worth around $18bn, according to Financial Times calculations.
The IMF sold gold directly to the central banks of India – 200 tonnes; Sri Lanka – 10 tonnes; Bangladesh – another 10 tonnes and Mauritius – two tonnes.
Copyright The Financial Times Limited 2010
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