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. Last Updated: 07/27/2016

Russia's Sales Depress Gold Price




LONDON -- Gold prices retreated from the day's highs Wednesday, pushed down by data indicating Russia sold gold in November and by a failure to breach $285 resistance, dealers said.


The indicated Russian sales of around 80 metric tons of gold weakened sentiment only two days after the Dutch central bank said it would sell 300 tons of gold over the next five years.


Gold fell from a $285.50 high to fix in London on Wednesday afternoon at $280.95, down $2.35 on the morning fix. It ended the European session at $280.70/$281.70, down from the New York close at $282.80/$283.80.


"There has been some profit-taking, prompted by the news that Russia had sold 80 tons of gold in November," one dealer said.


According to data on the Russian Central Bank's web site, www.cbr.ru, the value of the Russia's gold reserves fell to $3.906 billion Dec. 1 from $4.671 billion Nov. 1.


The Central Bank officially values its gold reserves at $300 an ounce.


A simple calculation using these figures indicates that the bank's gold reserves fell by 79.31 tons in November to 404.97 tons from 484.28 tons.


A Central Bank spokeswoman neither confirmed nor denied that its gold reserves had fallen by this amount in November.


Dealers said gold traded in a shifting range in late Europe.


"It is choppy. Looking at the technicals, I think we are going to go down and test $275 again. There seems to be very good physical demand at the $275 area," a dealer said.


Bullion's downward move since Britain's Nov. 29 gold auction, which sparked price weakness after the market saw the sale result as disappointing, would have helped producers buy back gold to close hedge positions.


"Any dips below $280, I wouldn't be surprised if you'd see more talk of producer buybacks closing out some sticky hedges," one dealer said.


Switzerland's upper house Wednesday passed a bill authorizing the sale of 1,300 tons of excess gold from Swiss reserves, but minor differences from the lower house version of the legislation held up final approval.


If differences over coinage rights are ironed out as expected in the next few days, the law can win final parliamentary approval before the session ends on Dec. 22, paving the way for sales to start as planned next year.


The planned Swiss sales of 1,300 tons plus 415 tons of gold being sold by Britain are part of the 2,000-ton five-year limit agreed to by 15 European central banks in late September.