Gold Falls as Germany Reiterates Interest in Selling the Metal
Sept. 4 (Bloomberg) -- Gold futures in New York fell after Germany's finance minister reiterated interest in selling some of the German central bank's precious-metal reserves, the world's second-largest.
Germany would sell gold in ``small steps,'' Finance Minister Hans Eichel said in a televised interview with Bloomberg News. Bundesbank President Ernst Welteke has said he wants the option of selling some of the central bank's gold when an accord limiting such sales comes up for review next year.
``The market came back from its rally'' because of Eichel's comments, said Steve List, a trader at Campbell & Co., which manages $5 billion in commodities funds.
Gold for December delivery fell $1, or 0.3 percent, to $374 an ounce on the Comex division of the New York Mercantile Exchange. Prices, which reached a seven-month high of $380.40 on Tuesday, still have risen 18 percent in the past year.
Net sales of gold by central banks last year rose 5 percent to 556 metric tons, the most since 1992, according to the Gold Survey 2003 report by London-based researcher Gold Fields Mineral Services Ltd.
The gold made available by central banks last year was the third-largest source of the metal after mine production and gold scrap, Gold Fields said.
``Whenever the central banks begin to sell or increase their sales of gold, it is probably the single-worst thing that could happen to the gold market,'' said Dennis Eich, a trader at Chicago-based brokerage Peregrine Financial Group Inc. ``They still have plenty of gold that can drive prices down.''
The Washington Accord limits European central banks to selling 400 tons of gold a year. The 15-nation agreement was forged in 1999, when gold fell to a 20-year low of $253.20 an ounce.
Germany lags only the U.S. in gold holdings and has about 3,500 tons of the metal.
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