Swiss to sell 250t of gold Kevin Andrusiak June 18, 2007
THE Swiss National Bank has announced plans to sell 250 tonnes of gold before the end of September next year, sparking a change in direction by European bankers. The sale, which equates to about 8.8 million ounces, comes as central bank sales in Europe fell to a nine-year low last year and gold sales in the 12 months to the end of September this year are expected to top 500 tonnes, according to UBS.
JP Morgan said the SNB sale represented about 6 per cent of annual demand. SNB will still retain 1040 tonnes in its gold stockpile and will remain one of the biggest global holders of the precious metal.
"By reducing its gold reserves and increasing its foreign exchange reserves, the overall risk on SNB assets will decline," the bank said.
However, analysts warned that the sale could trigger a downward shift in gold prices and gold-focused stocks.
"This is likely to put downward pressure on gold and gold equities," JP Morgan analysts led by John Bridges said in a report last week.
"This is a little disappointing since we had been hoping that the central bank sales shortfall of last year would be repeated in 2007 and contribute to a stronger gold price."
The spot price of gold remained firm on Friday.
The spot gold price gained 0.45 per cent in New York trading on Friday, up $US2.90 an ounce to $US654.50 an ounce.
The price of the yellow metal has gained 16.4 per cent, or $US92.30 an ounce, in the past 12 months, according to website www.kitco.com.
Additional reporting: Bloomberg
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