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Impact of IMF

gold sale seen

limited: Japan traders

TOKYO: News that the International Monetary Fund (IMF) might sell gold out of its reserves to raise funds to help poor nations is unlikely to have a major impact on gold prices, Japanese traders said on Monday.

"The impact of the news on the gold market could be limited, as it is not seen as a really fresh factor," a senior dealer at a foreign bank said. "The market has already digested the news."

Japanese traders said the possibility of the IMF selling gold out of its reserves has been a topic in the gold market in recent months.

Over the weekend, the Group of Seven (G7) nations discussed ways for the IMF to assist the world's poorest and most heavily indebted nations, and selling the IMF's gold reserves was cited as one possibility.

"Although the news is basically bearish for gold, we believe that falls in gold prices could be limited," he added.

Spot gold was resilient on Monday after the news and gold was well supported at about $390.40/70 per ounce during Asian hours.

Spot gold was quoted at $390.70/391.20 at 0600 GMT per ounce at 0551 GMT, against $390.50/80 in New York on Friday.

Japanese traders said they saw the initial support level for gold prices at $388.00 per ounce.

Some bullion house industry officials said the impact of the news may hinge on the way the IMF sells its gold.

"Even if the IMF has formally decided to sell gold, we expect the IMF to sell gold in a way that will not disturb spot gold prices," one official at a bullion house said.

He said he believed the IMF might sell gold to some central banks, not to the spot gold market.-Reuter