European Central Banks Announce Gold Agreement

European central banks party to the Central Bank Gold Agreement have renewed their five-year gold agreement, which will lower the annual sales limit to 400 metric tons of gold and allow for the International Monetary Fund to join as a new signatory if it wishes to.

The European Central Bank, the 16 central banks of the euro zone, Sweden’s Riksbank and the Swiss National Bank all signed up to the third CBGA agreement, the ECB said Friday.

The announcement was keenly awaited because the old pact expires in September, and surprised the market as it imposed a stricter limit on sales even while it allows for the IMF to join at a later date.

Analysts said the lower ceiling on gold sales was a belated recognition that central banks have grown less willing to sell their reserves, reflecting a change in thinking at central banks at a time when the dollar is in decline and inflation worries are widespread.(…)

The ECB said total gold sales over the five-year period will not exceed 2,000 tons. The new program will start on Sept. 27, immediately after the end of the previous agreement.

The ECB hinted in its statement that the IMF may join the agreement at a later date.

"The signatories recognize the intention of the International Monetary Fund to sell 403 tons of gold and noted that such sales can be accommodated within the above ceilings," the ECB said in the press release.

Commerzbank precious metals analyst Eugene Weinberg said the agreement wouldn’t have much of an impact on gold prices in the near term, as a renewal of the agreement was expected.(…)

Full WSJ article

 

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