UK drops out of official gold cartel

BRITAIN astonished the gold market today by dropping out of the official cartel that caps sales.

As the central banks of 15 European nations announced a new pact restricting annual sales to 500 tonnes, traders were surprised to see Britain was not a signatory.

The new agreement takes effect from September and replaces an old one set up in 1999 which limited sales to 400 tonnes a year.

Britain, which has sold two-thirds of its gold reserves in recent years, was a member of the 1999 group. The Treasury said it had no plans to sell gold and therefore was not participating.

Philip Klapwijk of gold expert GFMS said: 'I would have expected the UK to have been in the accord.' Ducking out would give Britain more leeway to lend gold, he suggested.

The new pact was slightly more relaxed than expected, sending the gold price 50 cents lower to $399.35.