Some bank other than ECB, probably Spain, was selling gold heavily

Central Bank Gold Sales
Seen Lasting Through Summer

By Melanie Burton
Dow Jones Newswires
Monday, June 4, 2007

LONDON -- The European Central Bank said Monday that sales of gold from its foreign exchange reserves announced Friday haven't yet shown up in
weekly ECB statistics, which analysts said implies that large gold sales are being conducted by another signatory to the Central Bank Gold Agreement and
could continue over the summer.

Head of Press Regina Karoline Schuller told Dow Jones Newswires that the 37 metric tons of gold sold by the ECB in May hadn't yet shown up in ECB data and "will be reflected in the relevant weekly financial statements in due course."

The ECB's weekly data for May -- which cover it and the national central banks in the CBGA but doesn't identify individual signatories -- show gold sales of
around 42 tons for the month, said VM Group analyst Matthew Turner.

"We had assumed that was Spain, and as such Spain was consistently selling 40 tons a month," he said.

According to data on the Spanish Central Bank's Web site, Spain sold around 40 tons of gold from its foreign exchange holdings during March and April.

While the ECB data is limited because it doesn't identify which of the signatories sold gold, most analysts are betting it will prove to be Spain
again.

The Spanish central bank is due to release statistics regarding its foreign exchange holdings for May on Tuesday.

Analysts are waiting for confirmation that Spain was behind the sales, which
have been capping upside gold price momentum since March.

Analysts also believe gold sales could then continue into the summer.

There's no reason to believe that Spain won't sell another 40 tons in June," Turner said.

And analyst John Reid of UBS said in a daily note, "If the Spanish central bank continued to sell at this rate in May, we will suspect that heavy sales will continue through the quiet summer months."

Friday gold prices climbed 1.5 percent as the ECB announced it had sold 37 tons of gold and didn't intend to sell any further gold from its holdings for the remainder of the current agreement year.

"It is not the ECB's intention to sell more gold in the current year of the agreement," which ends Sept. 26, the bank said in a statement.

The five-year CBGA limits combined sales of gold by individual countries to a
total of 500 tons over the course of the year, which ends Sept. 26. The accord covers 16 central banks, including Spain and the ECB.

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