Central banks call for extended agreement

European central banks want to extend the Washington Agreement, which has helped lift gold prices by capping sales of bullion reserves.

The agreement, signed in September 1999, limited gold sales by its 15 backers, thus removing the threat that central banks would rush to sell reserves and invest the proceeds elsewhere.

The pact is credited with enabling gold prices to reach US$300 per oz., compared with US$250-260 per oz. at the time that the agreement was signed.

The deal, which limited central bank sales to 400 tons per year, is set to expire in 2004, and there are concerns that without an extended agreement in place, more gold could flood the market.

The London-based World Gold Council estimates that 1,030 tons of gold have been sold under the Washington Agreement.