OWN CORRESPONDENT, Pretoria | Thursday 1.00pm
THE United Kingdom Treasury said it will sell 150 tons of gold in six auctions this year and next, pressing on with its partly completed plan to cut the country’s gold holdings by more than half to 300 tons.
This second set of 25-ton auctions will start in May and continues Britain’s programme to restructure and modernise its reserve holdings with purchases of foreign currency.
Analysts said the announcement will disappoint some in the market and would focus attention on the gold price again after last year’s wild moves. The decision to reduce UK gold reserves sent prices crashing last year, with gold reaching a 20-year low of $251,70 in August before recovering to a two-year high of $338 early in October after 15 European Central Banks pledged to limit gold sales, lending and derivatives activity.
The UK Treasury said that the sales will follow the final auction in the current series of five sales, which will dispose of a total of 125 tons of reserve gold, set for March 21.
”There will be six auctions during 2000-2001, starting in May. As in 1999-2000, the auctions will be of approximately 25 tons each, conducted on a single price basis,” the Treasury said in a statement. The gold price lost almost a dollar after the news of the sales to $287.75/$288.50 a troy ounce from $288,70/$289,20 just before the announcement. Kevin Norrish of Barclays Capital in London, said the Treasury announcement will have a limited impact on prices.
”I don’t think it is highly significant. They have just firmed up the dates. But it will focus attention on it again. It is of limited impact, but in a market that is not strong at the moment, it will not help.” — Reuters