IMF report fails to impact Europe gold prices

LONDON: Gold prices held above support at $426 per ounce on Thursday in Europe, with the market discounting remarks by the International Monetary Fund and US government on possible IMF gold sales.

Debt relief for the world’s poorest countries has taken centre stage in global economic discussions after finance ministers from leading industrialised countries agreed to tackle the issue at a G7 meeting last month. IMF Managing Director Rodrigo Rato said in a newspaper report that if member countries wanted to use the fund’s massively undervalued gold reserves for debt relief they should do so by selling the metal, not by revaluing its book rate.

But the United States, which wields influential voting rights in the IMF, said there was no need for the Fund to sell bullion. Spot gold firmed to $427.25/428.00 per troy ounce by 0949 GMT from $426.60/$427.30 late in New York on Wednesday.

“The IMF gold comments have not really had much impact as this has all been said before — the euro looks quite oversold versus the dollar, which is where people seem to be focusing,” a dealer said. The euro was last $1.2953.

Analyst Frederic Panizzutti of MKS Finance said: “I doubt that sales will happen — at least over the short or medium term. The US government is opposed to it and that will make it very difficult.”

The global lender’s gold stocks of 103.4 million ounces are worth some $42.3 billion at today’s market prices. But under a 1971 agreement, most IMF gold is valued at between $40 and just over $50 an ounce, a fraction of the current price. reuters

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