IMF Gold Sales May Begin in 2010, Citigroup Forecasts

(Bloomberg) -- The International Monetary Fund will probably sell 200 metric tons of gold annually starting next year, “potentially weighing on prices,” Citigroup Inc. said in a report e-mailed today. Gold will fall to $850 an ounce in the second half of 2010, Citigroup Sydney-based analyst Alan Heap wrote in the report. The IMF board will approve a gold sale before its annual meeting in October, Reza Moghadam, director of strategy, policy and review, said on July 29. A planned sale of 13 million ounces (403 tons) was accepted by the U.S. last month.

“We believe the sell down will likely begin in 2010 and see around 200 tons sold per year, potentially weighing on prices,” Heap wrote in the report. Gold for immediate delivery rose 91 cents, or 0.1 percent, to $935.32 an ounce by 1:27 p.m. in London. The price may rise to $1,000 in the first six months of 2010, according to Heap.

The IMF owns 3,217 tons of gold, the third-largest holder of gold after the U.S. and Germany, according to data compiled by London-based research company GFMS Ltd. A sale of 200 tons would compare with 246 tons disposed last year by central banks, according to GFMS. European central banks have an agreement to limit their gold sales to 500 tons a year, and that arrangement expires in September. A new accord has not been announced.

“The central bank agreement is expected to be renewed after it expires in September, although, in our view, it could now perhaps afford to be more relaxed in terms of annual limits and allocating quotas,” Barclays Capital analyst Suki Cooper wrote in a report today.