SINGAPORE (Reuters) - Gold sales by the International Monetary Fund for third-world debt relief could weaken bullion prices over the longer run but any dip could be temporary because of strong demand at lower price levels from Asian buyers.
Ministers from the Group of Seven industrialized nations said over the weekend the IMF would consider using its gold reserves to cut the debt of the world's poorest nations. The fund is the world's third-largest gold holder with reserves of around 3,217 tonnes.
Gold, which fell $1 an ounce on Friday to 415.20 in New York on talk of the IMF gold sales, dipped to a near-four-month low of $413.50 an ounce in Asia on Monday before recovering to around $414.50.
Yukuji Sonoda, a precious metals analyst at Daiichi Commodities in Tokyo, believes gold is nearing its bottom at around $410 and would soon rebound because of buying interest from India, the world's largest gold consumer.
"The market is over reacting. The outcome of the G7 meeting is not surprising," said Sonoda. "End-users in Japan, China and also India are very comfortable with this price level," he added.
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Source: Reuters By Lewa Pardomuan