Bad News for Gold Bugs? IMF to Sell Nearly 200 Tons

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Gold futures came under further pressure Thursday after the International Monetary Fund said it would sell another 191.3 metric tons of gold. The IMF has already sold the rest of the 403.3 tons of gold it pledged to put on the market in September.The IMF said it will sell the remaining gold in a "phased way" to prevent market disruption and undue pressure on prices, but gold futures were off more than $13 to $1,107 an ounce in early trading, extending declines from an all-time nominal high of about $1,180 set late last year. The exchange-traded fund SPDR Gold Trust Gs (GLD) has declined more than 8% from a 52-week high set in early December.

"The top priority in conducting the gold sales is to avoid disruption to the gold market," Andrew Tweedie, director of the IMF's Finance Department, said in a statement. "Prior to any sales on the gold market, sales were first made exclusively to interested central banks, thus shifting gold within the official sector."

But analysts prepared clients for further drops in the price of the precious metal. "While the IMF attempts to sell the gold in a phased manner over time, short-term gold supply is likely to rise and could, at least psychologically, weigh on the gold price," wrote analysts at Germany's Commerzbank.

Since September, the IMF has sold 212 metric tons of gold. The biggest purchaser was the Reserve Bank of India, which bought 200 tons for $6.7 billion. That's considered to be "the single largest gold transaction in recent decades," the IMF said. The remaining gold was purchased by the Central Bank of Sri Lanka (10 tons) and the Bank of Mauritius (two tons).
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