LONDON, Feb 26: Gold fell 1.2 per cent on Tuesday as possible sales of a part of more than 3,000 tons of gold held by the International Monetary Fund dampened sentiment.

The United States said on Monday it supported the sale of a limited portion of the IMF’s gold stocks and was confident Congress would support the move.

The US Treasury had earlier resisted seeking Congressional approval. “It is a material development and suggests that it could actually get through.

That’s a genuine change because the market was assuming otherwise, Stephen Briggs, economist at SG Corporate and Investment Banking, said.

In itself, it won’t be a huge thing but it is definitely something that the market was not expecting.

Gold was already overdue a correction after this run and this is a good enough excuse. It has taken steam out of gold for the time being.

Spot gold fell as low as $926.40 an ounce and was quoted at $931.60/932.40 against $937.80/938.60 in New York on Monday and off last week’s record high of $953.60.

The IMF is the world’s third-largest gold holder, with 3,217.3 tons of reserves. Any sale of IMF gold might be done in accordance with a European Central Bank gold accord, which limits total gold sales to 500 tons a year, analysts said.

Strong buying on dips is likely to be witnessed outweighing temporary liquidations on such news, which are quite common when there are sharp price rises, said Pradeep Unni, analyst at Vision Commodities, referring to IMF gold sales news.

Gold should trade strong for most of this year, at least till mid-2008, he said in a market note, adding the dollar was expected to remain weak in the near- to medium-term.

In other precious metals, platinum dropped 2 pc to track falls in gold and as investors booked profit from last week’s record highs. Palladium was below a 6-1/2-year high and silver off its best level in 27 years.—Reuters