ZURICH/LONDON A proposal to prohibit the Swiss National Bank from selling any of its gold reserves has the support of 44 percent of the public, a closely watched survey showed on Friday, though that result falls short of the backing it needs to pass into law.
The group behind the opinion poll also said support was likely to diminish as a Nov. 30 vote on the measure approaches.
That proposal has sparked jitters in both gold and currency markets. If approved, the SNB would have to massively bolster its gold holdings, which stood at 1,040 tonnes this month according to the World Gold Council, representing 7.8 percent of reserves.
The right-wing Swiss People's Party (SVP) proposed the measure, which would require the SNB to hold at least 20 percent of its assets in gold. It would also prevent the bank from selling any of its gold, even if the ratio of gold to other assets climbs above 20 percent.
To get to 20 percent, the SNB would have to go on a buying spree that could push gold prices significantly higher. It could also endanger the three-year cap on the value of the Swiss franc against the euro imposed by the SNB to prevent the Swiss currency from appreciating, ward off deflation and boost growth.
The poll, conducted by Berne-based research institute gfs.bern in partnership with Swiss broadcaster SRG, found that 44 percent of respondents favored the initiative, short of the majority needed for passage, while 39 percent opposed it. Of those asked, 17 percent were undecided or gave no answer.
Authors of the study, which comes after an online poll on Tuesday by free Swiss daily newspaper 20 Minuten showed a similar result, said it expected opposition to eat away at support for the SVP's proposal as the vote approaches.
"Increasing opposition during an election campaign corresponds with the normal scenario for a public initiative," the study read.
The study, the most reliable polling yet ahead of the vote, also said the public was still at the early stages of making up its mind over the proposal and that this could significantly alter the final result.
If it is adopted, the government would have up to three years to write the proposal into law, subject to consultation with stakeholders. The SNB would then have five years to up its holdings to at least 20 percent.
The SVP gold initiative is opposed by the Swiss government, the central bank and several influential parties, and one of the SNB's board members this week again stressed its disagreement with the proposal.
"We're taking this extremely seriously," Fritz Zurbruegg told a public conference at the Graduate Institute in Geneva on Tuesday.
"The SNB doesn't (normally) take a stand in politics. This is an initiative that we feel would seriously impair our ability to fulfill our legal mandate. This will seriously affect how we exercise monetary policy."
Gold prices are little changed so far this year after plunging 28 percent in 2013, dramatically ending a more than decade-long bull run. A "yes" vote, leading to sustained official sector buying, would likely have a significant price impact.
"Implications of this could be quite dramatic for the gold price, and maybe for markets beyond gold," UBS strategist Beat Siegenthaler said, speaking before the poll result was released.
"It's really an attempt to return to some kind of gold standard, for those who don't trust paper money and who want gold backing it up."
Central banks were heavy sellers of gold until recently, cashing in on an asset that had languished near $300 an ounce for a decade before slipping to a 20-year low in 1999.
The same gfs.bern poll also showed a majority of Swiss voters are against plans to place severe limits on immigration and population growth.
(Reporting by Joshua Franklin in Zurich and Jan Harvey in London; Additional reporting by Tom Miles in Geneva; Editing by Larry King)