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European Central Bank won't sell gold through September
By Claudia Carpenter
Bloomberg News Service
Friday, June 1, 2007
LONDON -- Gold rose in London after the European Central Bank said it has no plans to sell more gold through September. Silver also gained.
The ECB has sold 60 metric tons since September, the bank said in an e-mailed statement today. Gold dropped 2.8 percent last month, the biggest decline since September, amid accelerating sales from banks in Europe.
"The bulls have free rein to move gold up," said David Gornall, head of bullion and foreign exchange in London at Natixis Commodity Markets Ltd. "You are effectively removing one source of the selling pressure."
Gold rose $3.40, or 0.5 percent, to $663.90 an ounce at 1:01 p.m. local time, bringing the gain this week to $7.90, or 1.2 percent. Prices have climbed 5.4 percent in the past year.
European central banks are allowed to sell as much as 500 tons a year under the so-called Central Bank Gold Agreement. The ECB's sales are in "full conformity" with that agreement, the bank said.
"It is not the ECB's intention to sell more gold in the current year" of the agreement, which ends Sept. 26, the central bank said in its statement.
Bullion was higher before the ECB announcement on indications that demand from jewelry and coins is strengthening.
The MKS Finance SA refinery in Switzerland, capable of processing 400 metric tons of gold jewelry and coins a year, is fully booked for a second consecutive month, said the company's chief gold trader, Bernard Sin. Business slowed in April as prices climbed 2.2 percent.
"Those who need immediate delivery have to be in a queue," Sin said by telephone from Geneva. Demand from India, the world's biggest gold consumer, and parts of Asia revived, "especially after prices dropped," he said.
"Gold would need to break above $665 in order to cement the medium- to longer-term bull trend," Standard Bank Plc said in a report today from Dubai, United Arab Emirates.
Gold may be catching up with gains in industrial metals such as copper and nickel, said Christoph Eibl, who helps manage about $1 billion at Tiberius Asset Management in Zug, Switzerland. Copper has risen 17 percent this year and nickel is up 41 percent, against gold's 4.1 percent advance.
"We don't like gold as much as the other precious metals," Eibl added.
Silver advanced 10.49 cents, or 0.8 percent, to $13.5399 an ounce, for a weekly increase of 58.99 cents, or 4.6 percent, the biggest since Jan. 12.
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