Friday, April 3, 2009

G20 summit: Gold falls on IMF sales fears

The spot price of gold hit a session low of $893.24 an ounce on Thursday after Prime Minister Gordon Brown said the G20 would ask the International Monetary Fund (IMF) to bring forward its gold sales programme.

In the leaders' statement at the conclusion of the G20 summit Mr Brown said the participants agreed to "use the additional resources from agreed IMF gold sales for concessional finance for the poorest countries".

The precious metal started off the day at $927.40 an ounce and was sliding even before Mr Brown started to speak, as global equity markets rallied on tentative hopes for a recovery.

Investors were less interested in safe haven buying as optimism grew that the measures proposed would help boost the global economy.

However, prices recovered later in the session to about $908 an ounce after IMF Managing Director Dominique Strauss-Kahn clarified that the statement was not proposing any new gold sales.

The IMF had already announced the sale of 403.3 metric tonnes of gold, worth about $11bn (£7.5bn), to bolster its finances, but the 3.6pc fall to the session low reflected fears that additional gold sales were being planned.

The IMF has around 3,217 tonnes of gold reserves, which means it holds the third-largest reserves of the precious metal after Germany and the US. It has been calculated that Gordon Brown cost the British taxpayer more than $2bn by selling 400 tonnes of bullion in auctions between 1999 and 2002 when the price was at a long-term low.

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