Will gold see support at $900?
*Financial Times, by Chris Flood, March 12, 2009
“Gold extended its push above the $900-an-ounce level on Thursday while oil prices staged a modest rebound after a sharp fall in the previous session that was prompted by the latest weekly US inventories data which painted a mixed picture for demand.
Gold rose 1.4 per cent to $915.25 a troy ounce, moving between a low of $906.95 and a high of $915.65, after ending trading in New York on Wednesday at $906.65.
The current Central Bank Gold Agreement which limits annual sales by its signatories to 500 tonnes is due to expire on September 26 and traders expect a new CBGA to be announced at any time because the IMF has indicated that it wants to sell 403.3 tonnes from its reserves.
Tim Geithner, the US Treasury Secretary, said the Obama administration would press Congress to allow the IMF which is the world’s third-largest holder of gold to sell part of its stockpile of 3,217 tonnes.
James Steel, precious metals analyst at HSBC said that although the Obama administration might well support the IMF proposals for gold sales, US congressional approval was by no means assured.
‘Several prominent US senators from gold-producing states, some of whom sit on influential committees, are on record as opposing any such sale,’ said Mr Steel.”
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