Last Updated : 11 April 2013 at 10:55 IST
The Central Bank of Cyprus has clarified that reports of Cyprus' $523 million gold sale have not been “raised, discussed or debated” and there exists no “current or future plans to do so on the board’s agenda.” This was reported by Cyprus News Agency to whom the spokesperson for the Central Bank of Cyprus decided to talk.
The news agency Reuters had reported yesterday that “...European Commission documents showed Cyprus plans to sell 400 million euros' worth of reserves to finance part of its bailout - a move that marks the biggest euro zone bullion sale in four years.”
This had caused gold prices to slip drastically. “Spot gold hit a low of $1,567.54 an ounce and was down 1 percent at $1,568.46 an ounce at 1521 GMT.” Reuters report noted.
As of writing this, gold is trading on the Comex at $1559.45 an ounce, a gain of $0.65 or 0.04% as of 10.21 AM IST.
The story of Cypriot gold sale coupled with bearish reading of Federal Open Market Committee Minutes (which was released ahead of schedule) almost killed the gold bulls. The members stand divided on when the Easing measures should be ended. But it has to be noted that the Fed minutes are of the FOMC meet held March 19-20.
The recent job data portray a bleak image of the US economy as it failed to add as much jobs as expected. The reports showed that only 88000 jobs had been much lower than expected figures. And invariably the big Ben of Federal Reserve has tolled umpteen times that Quantitative Easing measures are tethered to job market recovery in US.
This means, the new FOMC meet scheduled for April 30- May 1 may take a hawkish stand. Gold still has some firepower left in it!
Now, what if Cyprus had really decided to sell gold?
Chances are low that a Cyprus gold sale would increase the supply of gold to such an extent that it would create a gold deluge and bring down prices.
There is still so much of gold appetite left in the markets.
"No country's gold reserves are sufficient on their own to make more than a small (difference) in their debt position, and they probably think holding gold reserves is better than selling them... if there is a risk you may leave the euro." Macquarie metals analyst Matthew Turner said to Reuters in a different context.
Chances are more that story of Cyprus gold sales having brought gold futures down is a temporary phenomenon. This, coupled with a possible hawkish stand for the next FOMC meet would see to it that gold futures would see some uptrend in the futures.
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