The Really Useful Gold Thread

Gold roars after ECB member bank buys
By Ambrose Evans-Pritchard
Last Updated: 1:02am GMT 03/01/2007


Buying bullion: central banks seek alternatives to the dollar


Gold punched ahead in New Year trading on dollar weakness and the revelation that a member of the European Central Bank system had begun buying bullion, the first such purchase in years.

The ECB's family of 12 banks have been major sellers of gold since the euro launch in 1999, helping to drive prices down to a 20-year low at the start of the decade. Constant ECB sales have acted as a cap on rallies.

Any indication that Europe's big guns are at last switching to the buy side – even if tentatively – could have a profound effect on investor psychology at a time when central banks worldwide want alternatives to dollar reserves.

The ECB said one of its member banks bought gold in the week ending December 22, 2006, but did not identify the amount or country. The news helped lift gold $4.10 to over $640 an ounce.