The International Monetary Fund said today it will soon begin selling 191.3 tonnes of gold in the open market. This is the amount remaining to be sold under its gold sales programme, which was launched last year to raise more money for lending.
The IMF said the sales "will be conducted in a phased manner over time" to avoid disruptions in the gold market. The fund left the door open for central banks to keep buying the gold directly from the IMF. Asian central banks are expected to be major buyers.
The IMF announced last year it would sell a total of 403.3 tonnes of gold, about one-eighth of its total stock, to diversify its sources of income and increase low-cost lending to poor countries.
The Reserve Bank of India was so far IMF's biggest purchaser, picking up 200 tonnes of the IMF gold over two weeks in October, boosting its gold holdings to the 10th largest among central banks. Sri Lanka and Mauritius were the other purchasers.
IMF finance director Andrew Tweedie told the IMF Survey publication that the average price for the earlier three sales was a little over $1,050 an ounce, generating about $7.2 billion in proceeds and a profit of about $4.5 billion over the book value of the gold in the IMF's accounts.
The price of gold has increased by 20 per cent over the past two years. But a drop of 1 per cent in gold prices after today's news also rekindled worries about an increase in supply.
The sale pulled down the currency in Australia, which is the world's second-biggest gold exporter, and was partly blamed for a drop in oil prices to below $77 a barrel.