April 11 - Heavily indebted Cyprus will sell a large chunk of its gold reserves to raise 400 million euros, as doubts are raised over future gold prices. Kirsty Basset reports.
Cyprus is going for gold - and is digging into its reserves. The indebted country will offload around 10 of its 14 tonnes - raising 400 million euros to help finance its bailout. It will be the biggest sale of gold in the euro zone in four years. Gold prices fell 1.7 per cent on the news - the biggest one day drop in almost two months, partly driven by investor fears that other euro zone countries might now follow Cyprus' lead. Robert Cole is from Reuters Breaking Views. (SOUNDBITE)(English) REUTERS BREAKING VIEWS EDITOR ROBERT COLE SAYING: "Are central banks and hard pressed countries of Europe going to say hang on, we were saving that gold for a rainy day, isn't it raining? Shall we sell?" But Cyprus may prove to be a special case - analysts point out that if other euro zone countries were to sell their gold, it would only make a small difference to their debt position. Nonetheless, the tide seems to be turning on gold, long seen as a safe haven investment in uncertain times. The crisis in Cyprus and tensions in North Korea haven't helped gold prices as much as expected. The U.S Federal reserve's growing unease about printing money is also weighing on expectations. Goldman Sachs cut its average gold price forecast for this year to $1,545 an ounce and believes the precious metal will fall even further next year. But not everyone's convinced by their outlook. Michael Hewson is an analyst at CMC Markets. (SOUNDBITE)(English) CMC MARKETS ANALYST MICHAEL HEWSON SAYING: "I mean, I suppose it does make sense when you think how much the volatility in gold has shrunk over the past few months, but I'm not as bearish on gold as everyone else. It's becoming a little bit crowded at the moment and you have to ask yourself are they playing their book." Whether you side with the bulls or the bears, Cyprus isn't alone in selling gold. An exchange traded fund, SPDR Gold Shares has seen redemptions of around $7.7 billion so far this year, leading many to conclude that bullion's shine may be fading.