The IMF is irritating sentiment. The size of the sale is not important but the market hates uncertainty, said Nick Moore, markets analyst at stockbroker Flemings Global Mining Group. But Moore and other market-watchers emphasised that gold demand tradionally peaks in the second half of the year as buying accelerates ahead of seasonal festivals in the West and Asia.
Gold was fixed at $383.10 per ounce yesterday barely changed all week and well off the six-year high of $416.25 hit in February during a five-week investment fund-led rally. Wednesday's IMF board session endorsed more aid for the poorest nations but stopped short of spelling out how it planned to pay for that.
The United States, Britain and most other member nations, has proposed selling five million of the fund's 104 million ounces of gold if needed to help finance additional assistance to poor countries. But a few nations is not threatening. They will do it by auction like they did before between 1976 and 1980. They sold 750 tonnes of gold and the price actually rose during that period although that was in a much more inflationary environment, said Moore. The IMF's policy-making Interim Committee may take up the issue again at a meeting on September 29, but an agreement at that time seems unlikely. Plans to sell off IMF gold have rumbled around for a couple of years unsettling the gold market although no metal was actually released. However last week the US-based investment funds whose moves have frequently had colossal price impact on commodity markets, began to sell gold short
