Congress expected to approve IMF gold sale next week

Commodity Online

LONDON — The International Monetary Fund’s decisiion to sell its gold reserves could get the necessary approval from the US Congress next week.

At the G20 summit in London in April, participating countries agreed the IMF could sell 403.3 metric tons of gold as part of efforts to leverage up to $6 billion in concessional loans for low-income countries over the next few years.

In order for the sale to proceed, 85% of IMF shareholders need to approve the proposal. Since the U.S. has 17% of the votes, it has a de-facto veto over the proposal, which requires Congressional approval, but IMF Managing Director Dominique Strauss-Kahn told Dow Jones Newswires this week he expects Congress will soon approve the sale.

On Friday analysts said US Congress may approve International Monetary Fund gold sales as early as next week.

“This issue appears now fully priced into the gold market and any announcement confirming sales should not move the market — apart from perhaps a knee-jerk reaction,” said John Reade, an analyst at UBS.

Gold hit a three-month high Friday due to U.S. dollar weakness across a number of currencies such as the euro and pound. Traders and analysts said the metal is heading towards $1,000 a troy ounce with speculative buying reentering the market and the dollar weakening. …

The approval to sell gold, along with an increase in U.S. funding to the IMF, is scheduled for a debate beginning Monday as part of the 2009 Supplemental.

read more