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Richard Appel: The action of gold and the dollar is surreal
Markets Shrug Off Gold Sales by ECB
By Ambrose Evans-Pritchard
The Telegraph, London
Friday, April 1, 2005
The European Central Bank revealed yesterday that it had quietly
sold 47 tonnes of gold over recent months, but said it planned no
further sales before September.
The gold markets shrugged off the surprise announcement, which marks
the first time the ECB has joined national central banks in cutting
bullion reserves.
Gold rose in late trading in New York to reach $427.50 an ounce,
largely due to dollar weakness on US job figures.
The ECB said it had acted under the terms of a five-year deal by 15
European central banks to cap annual gold sales at 500 tonnes.
"It is not the ECB's intention to sell more gold for the first year
of the agreement starting on September 27, 2004 and ending on
September 26, 2005," the bank said.
The ECB's governing council has total freedom to juggle the bank's
reserves, which were inherited from the eurozone national banks at
the launch of the single currency in 1999. Gold makes up some 15
percent of the total.
The Swiss central bank has been a major seller under the accord, but
the Dutch and French have also been cutting their gold exposure.
Some 310 tonnes have now been sold since September by the signatory
banks.
The Bank of England withdrew from the accord last year, saying it
had no further plans to sell after cutting Britain's reserves by
half with auctions of 395 tonnes. Unlike the Bank of England, which
sold near the bottom of the market, the ECB has moved stealthily and
taken advantage of a sharp rise in bullion prices.
Analysts said that Asian central banks are most likely to be
snapping up the European sales to balance their own holdings. The
Chinese, Japanese, and Korean central banks collectively hold just
2 percent of foreign reserves in gold.
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Ted Butler silver commentary archive:
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