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Sr. Member
http://www.commodityonline.com/news/IMF-gold-sale-may-push-down-prices-below-$800-16691-3-1.html
In the last few months, gold prices have been on a winning spree, rising to a record $1,000 per ounce on the back of the bloodbath in stock markets and people’s fascination for gold as the best investment asset.
But the surge in gold prices may be a thing of the past soon. Gold prices are set to fall to $800 or below $800 levels thanks to the decision of the G-20 countries allowing the International Monetary Fund (IMF) to sell 400 tons of gold reserves in the open market to raise funds for its global projects.
”Gold prices are set for a big fall in the next two to six months mainly because of the IMF gold sale. There will be abundant supply of gold in the market in the coming months thanks to the release of 403 tons of IMF gold. Moreover, with stock markets looking up after the big falls, gold prices are likely to fall to $800 or below $800 levels,” bullion analyst Mark Robinson told Commodity Online.
He said the bullion markets across the world have not taken kindly to the G20 decision to pump in $1.1 trillion into the world economy to tide over the recession by selling the IMF gold. “Many bullion dealers feel the decision to sell IMF gold was not the right one,” Robinson said.
Kiran Mehta, a gold dealer in India’s Mumbai bullion market said that gold prices will come down in the market thanks to the IMF gold sale. “Gold prices have gone above $900 per ounce in the past few months because of the the increased investor demand seeking gold as the safest haven in the time of recession,” he said.
Mehta told Commodity Online that IMF gold sale will result in at least five per cent slump in gold prices before the end of this month. “I feel gold prices will come down to $850 per ounce by the end of this month.”
He said gold prices may dip further by June to below $800 per ounce once the supply of the precious metal rises due to the IMF sale. As per the G-20 decision, IMF can sell up to 403.3 tons of gold, which is the equivalent of one-eighth of its holdings.
On Monday, as bullion markets opened, spot and futures prices of gold at the London Metal Exchange, Asian markets and India bullion market fell. Gold dropped to $879.50 in morning trade in London from $905 at the afternoon fixing on April 3. The yellow metal was trading 15 percent below the record $1,032.70 set in March 2008. Gold prices eased in early Asian trade Monday as equity markets surged across the region but is likely to recover on speculation rising prices will revive demand for the precious metal as a hedge against inflation. Bullion was at $877.90 an ounce 10.00 a.m, down 1.6 percent from New York's notional close of $892.50. It fell to as low as $876.55, the lowest since Jan. 29.
On India’s MCX , benchmark gold August contract was at Rs 14,176 per ten grams at 2.58 p.m, off a high of Rs 14,235 per ten grams. June contract also fell to Rs 14,190 per ten grams at the same time, off a high of Rs 14,425 per ten grams.
Mehta said gold prices in India, the largest bullion market in the world, will suffer as there is no consumer demand but only investment-side demand. Demand for gold in India, the largest importer of the precious metal, has taken a knock and the country turned an exporter in March following the rise in old gold sales.
Leading bullion analyst James Moore said in the London Bullion Report that rising appetite for risk is flowing through markets, causing gains in equities and oil and a retreat in the gold price. “Demand for exchange-traded gold funds was also flat last week, with holdings unchanged for four days in a row,” he said.
Echoing his view, Fairfax Investment Solutions analyst John Meyer said gold price fall reflects fears of a banking collapse.
Latest statistics on sales by central banks that are signatories to the Central Bank Selling Agreement, a five-year agreement that limits total sales by signatories each year to 500 tons, shows that only 85 tons of reported selling has been carried out in the year which expires on September 26. Last year 358 tons were sold out of the permitted 500 tons.
According to the latest Fortis Bank Metals Monthly, central bank gold sales in the year to September 26 this year were likely to be only 145 tons, well short of the maximum possible.
Fortis said gold’s drop back to $900/oz from about $1000/oz in mid-February, despite huge investment flows, was due partly to sales of scrap gold and a collapse in jewellery demand. Consumers in India and the Middle East have been hit hard by global economic meltdown. While India reported zero gold imports in February and March, gold sales in several Middle East cities including Dubai have fallen as high as 60 percent.
In the last few months, gold prices have been on a winning spree, rising to a record $1,000 per ounce on the back of the bloodbath in stock markets and people’s fascination for gold as the best investment asset.
But the surge in gold prices may be a thing of the past soon. Gold prices are set to fall to $800 or below $800 levels thanks to the decision of the G-20 countries allowing the International Monetary Fund (IMF) to sell 400 tons of gold reserves in the open market to raise funds for its global projects.
”Gold prices are set for a big fall in the next two to six months mainly because of the IMF gold sale. There will be abundant supply of gold in the market in the coming months thanks to the release of 403 tons of IMF gold. Moreover, with stock markets looking up after the big falls, gold prices are likely to fall to $800 or below $800 levels,” bullion analyst Mark Robinson told Commodity Online.
He said the bullion markets across the world have not taken kindly to the G20 decision to pump in $1.1 trillion into the world economy to tide over the recession by selling the IMF gold. “Many bullion dealers feel the decision to sell IMF gold was not the right one,” Robinson said.
Kiran Mehta, a gold dealer in India’s Mumbai bullion market said that gold prices will come down in the market thanks to the IMF gold sale. “Gold prices have gone above $900 per ounce in the past few months because of the the increased investor demand seeking gold as the safest haven in the time of recession,” he said.
Mehta told Commodity Online that IMF gold sale will result in at least five per cent slump in gold prices before the end of this month. “I feel gold prices will come down to $850 per ounce by the end of this month.”
He said gold prices may dip further by June to below $800 per ounce once the supply of the precious metal rises due to the IMF sale. As per the G-20 decision, IMF can sell up to 403.3 tons of gold, which is the equivalent of one-eighth of its holdings.
On Monday, as bullion markets opened, spot and futures prices of gold at the London Metal Exchange, Asian markets and India bullion market fell. Gold dropped to $879.50 in morning trade in London from $905 at the afternoon fixing on April 3. The yellow metal was trading 15 percent below the record $1,032.70 set in March 2008. Gold prices eased in early Asian trade Monday as equity markets surged across the region but is likely to recover on speculation rising prices will revive demand for the precious metal as a hedge against inflation. Bullion was at $877.90 an ounce 10.00 a.m, down 1.6 percent from New York's notional close of $892.50. It fell to as low as $876.55, the lowest since Jan. 29.
On India’s MCX , benchmark gold August contract was at Rs 14,176 per ten grams at 2.58 p.m, off a high of Rs 14,235 per ten grams. June contract also fell to Rs 14,190 per ten grams at the same time, off a high of Rs 14,425 per ten grams.
Mehta said gold prices in India, the largest bullion market in the world, will suffer as there is no consumer demand but only investment-side demand. Demand for gold in India, the largest importer of the precious metal, has taken a knock and the country turned an exporter in March following the rise in old gold sales.
Leading bullion analyst James Moore said in the London Bullion Report that rising appetite for risk is flowing through markets, causing gains in equities and oil and a retreat in the gold price. “Demand for exchange-traded gold funds was also flat last week, with holdings unchanged for four days in a row,” he said.
Echoing his view, Fairfax Investment Solutions analyst John Meyer said gold price fall reflects fears of a banking collapse.
Latest statistics on sales by central banks that are signatories to the Central Bank Selling Agreement, a five-year agreement that limits total sales by signatories each year to 500 tons, shows that only 85 tons of reported selling has been carried out in the year which expires on September 26. Last year 358 tons were sold out of the permitted 500 tons.
According to the latest Fortis Bank Metals Monthly, central bank gold sales in the year to September 26 this year were likely to be only 145 tons, well short of the maximum possible.
Fortis said gold’s drop back to $900/oz from about $1000/oz in mid-February, despite huge investment flows, was due partly to sales of scrap gold and a collapse in jewellery demand. Consumers in India and the Middle East have been hit hard by global economic meltdown. While India reported zero gold imports in February and March, gold sales in several Middle East cities including Dubai have fallen as high as 60 percent.
