IMF to sell Gold

http://www.ft.com/cms/s/0/93b93034-2035-11de-a1df-00144feabdc0.html

Over the week, CBOT May soyabeans rose 7.1 per cent to $9.82 a bushel while CBOT May corn gained 3.4 per cent at $4.00 a bushel and CBOT May wheatincreased 9 per cent at $5.53 a bushel. Gold traded around $900 a troy ounceon Friday, off 0.3 per cent on the day and 2.3 per cent lower on the week as gains for equity markets hit sentiment towards bullion.

On Thursday, gold sank to its lowest level of the week at $893.70 after the G20 agreed to ask the IMF to bring forward bullion sales to finance help for the poor.

The IMF plans to sell 403 tonnes of gold but speculation that additional sales were to be considered was played down by analysts. The sale of the IMF gold is likely to be conducted under the Central Bank Gold Agreement, which is due to expire on September 26.

John Reade of UBS said that because of the limited time before the expiry of the CBGA and the legislative hurdles that needed to be cleared (including a US act of Congress), it was almost guaranteed that a third five-year central bank gold agreement (CBGA3) would be announced, probably at the IMF spring meetings where more detail on the planned gold sale would materialise.

John Reade of UBS said the IMF gold was likely to be sold during the next three years (by 2011) but the sales were “almost insignificant” compared with changes taking place in investment, jewellery demand and scrap supply.

“We continue to forecast that gold will average $1,000 an ounce for 2009 and $900 an ounce for 2010, said Mr Reade, “although we continue to warn of upside risks to our forecast for 2010 if investors become worried about the prospects for higher long-term inflation.”