Here`s the article.
chevy56
Gold Futures Fall on Bank Sales; Silver Advances (Correct)
By Pham-Duy Nguyen
June 5 (Bloomberg) -- Gold in New York fell on speculation that central banks will increase bullion sales. Silver rose.
European central banks will probably sell all 500 metric tons of gold allowed under an agreement that goes through Sept. 26, UBS AG said in a report today. UBS previously forecast sales of 400 tons. Gold gained 1.5 percent on June 1, partly because the European Central Bank, one of the signatories of the accord, said it won't sell more gold until September.
``Central bank sales have been holding gold back,'' said Frank Lesh, a trader at FuturePath LLC in Chicago. ``What a better time for central banks to sell than on the rallies.''
Gold futures for August delivery fell $1.20, or 0.2 percent, to $675.10 an ounce on the Comex division of the New York Mercantile Exchange. The price earlier climbed as high as $678.80 and fell as low as $674.20.
Spain's central bank reduced its gold holdings to 9.9 million ounces in May, from 10.8 million ounces at the end of April, according to a statement on its Web site today. The ECB said two members of the Eurosystem sold gold worth 29 million euros ($39 million) last week.
``The market seems to be more fazed by central-bank selling than buying,'' said Robin Bhar, a UBS analyst in London. ``This could have a depressing influence on the price.''
Before today's announcements, signatories had sold about 290 metric tons of gold since September, according to the producer- funded World Gold Council.
Fed Outlook
Gold and silver opened higher after Federal Reserve Chairman Ben Bernanke suggested interest rates may not rise anytime soon, weakening the dollar against the euro.
Bernanke said tighter lending standards for mortgages will ``restrain'' housing demand longer than policy makers expected. The Fed has kept rates unchanged at 5.25 percent since June 2006.
``The dollar is down again and that's certainly going to be a good push for gold,'' said Lesh of FuturePath.
The euro reached a record $1.3681 against the dollar on April 27. The 13-nation currency traded as high as $1.3554 today.
Silver futures for July rose 6.7 cents, or 0.5 percent, to $13.812 an ounce. Before today, the metal had gained 6.3 percent this year while gold had climbed 6 percent.
A futures contract is an obligation to buy or sell a commodity at a set price for delivery by a specific date.
To contact the reporter on this story: Pham-Duy
