NEW YORK/LONDON (Reuters) - Gold fell over 1 percent late on Wednesday, reversing early gains after the International Monetary Fund said it would begin open market gold sales, but limited price impact is seen for the bullion.
Spot gold fell $13.05, or 1.17 percent, to a low of $1,105.75 an ounce after the IMF announced the sale of 191.3 tons of gold under a program launched last year to raise money for lending.
It later rose to bid at $1,108.10 at 5:25 p.m. EST (2225 GMT) against $1,118.95 late in New York on Tuesday.
“This is probably a knee-jerk reaction. At the end of the day, the sales from the IMF are well-known,” said Jacob Oubina, senior currency strategist at Forex.com. “In the medium-term, I don’t think this is going to have a discernible impact.”
Spot gold earlier on Wednesday hit a peak of $1,126.85 an ounce, its highest since January 20, while euro-priced gold rose to a record 820.84 euros an ounce on a positive outlook for gold investment demand.
Gold has posted hefty gains over the past week on growing concerns over the financial health of debt-laden Greece.
U.S. gold futures for April delivery on the COMEX division of the New York Mercantile Exchange ended 30 cents higher at $1,120.10 an ounce.
Commodities in general and gold in particular are still benefiting from fresh investment. Billionaire investor George Soros’ hedge fund more than doubled its bet on gold prices in the fourth quarter, an SEC filing showed.
Pension funds started investing actively in gold last year viewing the metal as a safe long-term investment, the head of the World Gold Council told Reuters.
“Investment demand from the United States and a lack of selling out of Asia are pushing gold up,” said Standard Bank analyst Walter de Wet, adding that a fall in net long positions in New York gold futures suggested gold had room to rise.
“For most of these commodities, speculative length has declined substantially, so there is room for more money to flow in,” he said.
Among other commodities, oil prices extended the previous session’s 3.9 percent gains toward $78 a barrel. Gold tends to track crude prices, as the metal can be bought as a hedge against oil-led inflation.
The World Gold Council said in its hotly anticipated Gold Demand Trends report for the fourth quarter of 2009 that investment appetite for gold was expected to stay firm, though overall gold demand fell 11 percent in 2009.
Global central banks will be net gold buyers in 2010 as they review their reserves policies, the head of the WGC told Reuters on Wednesday.
India remained the world’s No. 1 gold consumer, it said, with fourth-quarter consumption rising 13 percent to 180.7 tons year-on-year as wedding and festive demand peaked.
India’s gold imports for 2010 may rebound to 550 tons as prices steady and the economy revives, a senior official at a trade body told Reuters on Wednesday.
Among other precious metals, silver tracked gold lower at $15.87 an ounce against $16.12. Platinum traded at $1,531.50 an ounce versus $1,118.95, and palladium at $432.50 versus $430.50.
Reporting by Alonso Soto; Editing by Marguerita Choy