Gold futures drop as IMF announces gold sales

NEW YORK (MarketWatch) -- Gold futures dropped Tuesday, as the dollar strengthened against other major currencies and the International Monetary Fund said it would sell more than 14.2 million ounces of its gold reserves.

Gold for June delivery fell $8.80 to end at $918 an ounce on the New York Mercantile Exchange.
"You're seeing the trade key off of the stronger dollar mainly," said Zachary Oxman, senior trader at Wisdom Financial.
"Technically, [gold's] ability not to hold $920 in June does some damage to the contract," he said.
On Monday, gold futures closed up $13.60 at $926.80 an ounce.
On the currency markets, the dollar edged higher against major rivals after more downbeat U.S. housing data. The National Association of Realtors said its pending home sales index, which is considered a leading indicator of existing home sales, was down 21.4% in February from its year-ago level.
The dollar index, which tracks the performance of the greenback, gained 0.1% to 72.28. "For the moment, the action will continue to be dollar and U.S. economic news-driven until either ECB [European Central Bank] or Group of Seven signals are intercepted as to where next on the currency and interest rate scene," said Jon Nadler, senior analyst at Kitco Bullion Dealers, in a research note.
"The rate cut expectation fever in the U.S. has calmed somewhat, with markets now giving 64% odds to a quarter-point cut at month's end," Nadler said.
IMF to sell gold
The IMF said it will sell 403.3 metric tons of gold, currently valued at more than $13 billion, and cut substantial costs as part of an efficiency drive.

By Polva Lesova, MarketWatch
Last update: 4:19 p.m. EDT April 8, 2008


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