Gold outlook positive despite high sales

Central Bank Gold Agreement (CBGA) figures show that signatories sold a total of 67 tonnes of gold during July.

The major sellers are reported to be Swiss Central Bank (34.1 tonnes) and Spanish Central Bank (25 tonnes); the remaining 8 tonnes having arised from smaller sales by other unspecified Central Banks.

The July sales by Swiss Central Bank exceeded expectations, despite the bank’s recent announcement that it plans to sell 250 tonnes of gold by the end of the 2009 sales period.

However, the level of the disposal in July may have been to take advantage of the remaining shortfall of sales under the CBGA so far this year.

To the end of July, this totalled 353 tonnes, leaving the banks with an option to sell a further 147 tonnes during the period remaining under the Agreement, which ends in late September.

Sector analysts had though it unlikely that the full 500 tonnes allowed for under the CBGA would be sold.

However, Spain could continue to be relatively heavy seller, and the Swiss Central Bank is at the beginning of its sales programme.

Taking this into account, the overall gold market is likely to be depressed by such levels of sales, even if other Central Banks are seeking to build up gold reserves.

Whilst gold may not have risen in price as anticipated by some, analysts see its performance amid high sales levels as positive for the long term.