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Gold prices may dip 5% by month-end

Source: PTI
April 03, 2009 18:09 IST
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Gold prices are expected to slump by 5 per cent before the end of this month to $855 per ounce as leaders of G-20 nations agreed on Thursday that the International Monetary Fund should sell gold from its reserve to help stimulate the world economy.

Analysts say the prices may dip further by June once the supply of the precious metal rises due to sale by the IMF. The IMF can sell up to 403.3 tonnes, which is the equivalent of one-eighth of its holdings.

Already, spot prices of gold at the London Metal Exchange fell to $902.5 per ounce, down by 0.17 per cent from the previous close, due to the announcement by the G-20.

"We have started to see impact of the decision and the fall will continue. I expect the prices to come down to $855 an ounce before the end of April and it may dip further to $810 on or before June," said Ashok Mittal, vice-president and country head (India) of Karvy Comtrade.

"Gold prices will suffer as there is no consumer demand in India but only investment-side demand. If the supply rises and demand remains low, the prices will slump," he said.

In a communique the G-20 said, "Additional resources from agreed sales of IMF gold will be used, together with the surplus income, to provide $6 billion additional concessional and flexible finance for the poorest countries over the next 2-3 years."

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