One caveat, though, is that the Germans' intentions might inspire similar selling activity by EU peers. "But the German intent is shocking enough. By throwing its towel on the sun bed by the selling pool, before other European central banks wake up, it might create a rush to announce other sale intentions," says Smith, flagging Italy and France as possible candidates to announce sales in coming weeks. "Should prospective sellers wish to go the UK and Swiss route and sell at least half their gold, Norman is more optimistic. "All that this is doing is shaking the nerve of the weak longs. With Comex particularly long at the moment, you might see some selling on the back of it. Fundamentally, I still believe the market should be above $300 an ounce. I suspect this might be a temporary setback when some of the longs are shaken out," said Norman.

"I suspect the Bundesbank will do it in an orderly fashion and the unwinding of hedging that's going on and the supply side discipline that'll come from the contraction of the producer base will more than counter what the central banks will be prepared to offload," he says.