"Many pundits have been calling for gold to correct since October. But the rally in gold has been strong, steady and without any sizable corrections. Much money is still sitting on the sidelines, waiting for a cheaper entry point. It is quite possible that this entry point is coming soon as the G7 has just agreed to allow the International Monetary Fund (IMF) to start selling a portion of its 3,200 tonne gold holdings to cover its running deficits. The details of the sale will not be known until April, but the most mentioned figure for the total tonnes up for sale is 400 or about one eighth of total IMF holdings.
It is difficult to guess gold’s reaction to the news, but it is clear that the metal’s fundamentals remain sound. Paper money is in oversupply, gold is in demand by investors and especially countries looking to diversify away from the US dollar. Undoubtedly, buyers for extra gold offered by the IMF will be easily found. IMF sales don’t change anything."
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