Iranian central bank's coin sale bursts 'gold bubble'
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By Hashem Kalantari
via Yahoo News
Sunday, November 15, 2009
TEHRAN, Iran -- The price of gold coins in Iran fell by more than 4 percent after the Central Bank started supplying newly-minted coins to the market, Iranian newspapers reported on Sunday.
"The gold bubble burst," read a headline in daily Jam-e Jam, referring to Saturday's decline in the price of a standard Iranian gold coin to 2.69 million rials from a record high of 2.82 million rials reached last week.
The market was closed on Friday, which is a public holiday.
On Thursday the Central Bank announced plans to inject 5 million newly-minted gold coins into the domestic market in order to control rising coin prices and restore balance in the market.
At a coin price of 2.8 million rials, the total value of the planned intervention would amount to roughly $1.4 billion. It was not immediately clear over what time period the new coins would be supplied to the market.
The price of gold coins in Iran has risen sharply in line with developments on international markets where gold bullion has risen 28 percent this year to a record high $1,122.85 an ounce on Thursday. It traded at $1,118.85 on Friday.
Many Iranians buy gold coins as wedding gifts and as a long-term investment.
Iranian media said the new coins were being offered by three Iranian banks -- Kargoshie, Sepah, and Tejarat.
A standard gold coin weighs around 8.13 grams. It is also sold in smaller denominations of half a coin and a quarter of a coin.
The planned central bank intervention appeared in part to be an attempt to help bring down inflation and reduce liquidity in the economy. Iran's year-on-year inflation stood at 7.6 percent in October, continuing a downward trend that began in late 2008.
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