ECONOMY

Gold drops on Cyprus bullion sale plan

Gold slipped to session lows on Wednesday, pressured as 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 eurozone bullion sale in four years.

Although obstacles stand in the way of eurozone central banks selling gold to meet financing needs, the Cypriot move will focus attention on other heavily indebted eurozone gold holders.

The sale plan, set out in a draft assessment of Cypriot financing needs prepared by the European Commission, would be the first major gold disposal by a euro area central bank since France sold 17.4 tons of gold in the first half of 2009.

“The amount mentioned, 10 tons, is not large – we’ve seen that on average come out of exchange-traded funds this year every week,” Macquarie metals analyst Matthew Turner said.

“But it’s the first eurozone country to have said it will do this, and the first eurozone country to sell gold, other than Germany’s coin program, for a while.”

[Reuters]