Gold price drops on Cyprus sell-off news

<p>The price of gold has dropped by one per cent.</p>

The price of gold fell by over one per cent on the back of the news the Cyprus government is considering selling off its reserves to boost the nation's financial plight.

Its value dropped to $1,557 (£1,012) on revelations Cyprus will have to offload some 10 tonnes – or as much as €400 million – of the precious metal to improve its finances under the terms of its recent bailout deal.

Cyprus has been told by the rest of Europe that it is going to have to stump up €13 billion towards filling the €23 million hole in its finances, with the government revealing it is considering a range of other options, as well as the sale of its gold reserves.

According to a report by This is Money, the sale of the Cyprus gold reserves would amount to the biggest eurozone bullion sale in four years if it goes ahead.

A gold trader told the Bullion Desk earlier in the week that gold prices appear to be "stuck". The value of the precious metal has been slowly sliding since the start of the year.

Find out about commodities trading and learn CFD strategies at City Index

Join our live webinars for the latest analysis and trading ideas. Register now

GAIN Capital UK Limited (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.