Gold bars

The Cypriot finance minister has indicated that the government is planning to sell its excess gold reserves within next months, a move that could give jitters to the already damped bullion markets.

"The exact details of it will be formulated in due course primarily by the board of the central bank," Finance Minister Haris Georgiades told the Bloomberg TV.

"Obviously it's a big decision. [The government will do whatever is needed to ensure] smooth and effective cooperation between all decision- making authorities," said Georgiades referring to the reports of discontent on the part of Cypriot central bank in the government move.

Cyprus has to sell its "excess" gold reserves to raise €400m ($525m/£342m) to finance part of its EU-IMF bailout fund, according to a draft assessment on Cypriot financing needs by the European Commission.

However, central bank chief Panicos Demetriades earlier said that the government did not have the right to sell gold without his consent. Cyprus has a gold reserve of 13.9 metric tonnes, according to data from the World Gold Council.

Gold prices tumbled on speculations of Cyprus gold sale with the bullion hitting its two-year low on 16 April.

"I'm not really sure if the series of events is exactly matching with the recent movements in the price of gold, but I suspect maybe it was a contributing factor," said Georgiades.

More than Cyprus, the bullion market is concerned that other heavily indebted countries such as Portugal, Italy and Spain may decide to sell their gold reserves.