JOHANNESBURG () -- Gold bulls can breathe a sigh of relief. Extrapolating from yesterday's publication of weekly financial statements for the Eurosystem, European central banks sold only 2.42 tonnes of gold last week, according to Virtual Metals' researcher Matthew Turner. Assuming those sales occurred in the last two days of the current year of the Central Bank Selling Agreement, it brings the total sold by the signatories to 390 tonnes and 10 tonnes for Sweden.
According to Numis Securities analyst John Meyer, European central banks, particularly Germany, had decided to retain some gold reserves.
"This is an indication that banks in developed economies see a need to hold back on gold sales, perhaps to protect against economic risk or for higher price levels," he said.
"This could be interpreted as a bullish case for gold investment either physically or through exchange-traded funds."
That compares with the 500 tonnes of gold that the signatories were permitted to sell in the year to September 26.
They cannot carry over the allocation into the next year.
Of course, this does not necessarily mean European central banks will be holders, or even accumulators, of gold in the future. In the past year, when the dollar was weak and the gold price was high, it made more sense to hold on to gold than sell it for depreciating dollars.
If the relationship between gold and the dollar shifts next year, central banks could scramble to sell as much gold as permitted within the agreement.
What the last year has done, though, is introduce some uncertainty. Previously, central banks have sold their full annual allocation. If they didn't sell the maximum last year, they may not sell the maximum permitted in the next few years.
The increase in the gold price in the past few years might also have jolted central bank governors into the realisation that gold was not always a "one-way bet" and its weighting in their portfolios required some careful consideration.
The lack of public statements on their strategy may reflect uncertainty rather than cunning.
