May 31, 2007

Europe central banks to miss gold sale quota again

Reuters, Thu May 31, 2007 6:10AM EDT

Unlike previous occasions, gold prices have not fallen sharply despite heavy selling by central banks in the past weeks, as the market has discounted these sales, analysts said.

"The market is used to central bank sales at the levels of recent years, but it still takes a lively interest in what central banks are doing and their actions can have an effect on sentiment," said Jill Leyland, economic adviser to the World Gold Council, an industry-funded organization.

Gold prices have fallen about four percent in the past one month on a rise in the dollar and central bank gold sales.

"The market has adjusted to the increased supply from the standpoint that prices aren't tanking. The more and more they sell now without the price getting hurt too badly, the less and less they will be able to affect the price in future," said Neal Ryan, director of economic research at Blanchard & Co.

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