The International Monetary Fund announced Friday that its executive board had endorsed the sale of 403.3 tonnes of gold, worth about 13 billion dollars at current prices, to boost its lending capacity to poor countries.

Gold prices jumped last week to within grasp of record highs above 1,000 dollars per ounce on the back of a weak dollar and mounting economic optimism.

Last Thursday, gold hit 1,024.28 dollars an ounce in London -- the best level since March 2008 when it struck a record 1,032.70 dollars.

"The market has been widely expecting the confirmation of the (IMF gold) sales that were first proposed in January 2007," said Suki Cooper at Barclays Capital.

The IMF move "is short-term negative," Cooper said, forecasting a "five to 10 percent retracement" in prices.

In New York, gold futures prices for December fell to 1,004.80 dollars at 1525 GMT on Monday from 1,010.30 dollars Friday. They had closed above 1,023.00 dollars on Thursday, near the historic high of 1,033.90 dollars in March 2008.

The IMF announced the gold sale soon after the market closed on Friday, saying sales would be conducted under "modalities that safeguard against disruption of the gold market."

The 186-nation institution said the decision was a core element of a new income model to make it less dependent on its lending revenue to cover expenses, such as surveillance of members' economic and financial policies, that the board had approved in April 2008.

The Group of 20 key developed and developing countries, at their April summit in London, agreed the gold sales should allow the IMF to offer favorable conditions on loans to the poorest countries.

The IMF decision came ahead of a two-day G20 summit in Pittsburgh, Pennsylvania, that opens Thursday.

The gold sale plan "has been increasingly discounted by the market" since the initial approval, Morgan Stanley analysts said in a note to clients.

The analysts noted IMF's intention to maintain orderly gold sales and market stability, citing safeguards such as selling off-market to central banks or other official sectors, selling slowly -- potentially over several years -- and capping any on-market sales to levels within the new Central Bank Gold Agreement.

Under the pact, European central banks agreed to limit their gold sales to 400 tonnes a year.

The fund's assurance on sales "keeps the hope that the IMF's gold will be sold directly to other central banks or sovereign holders alive," said John Reade, analyst at UBS based in London.

Morgan Stanley analysts said they did not see the IMF gold sales "as a material threat" to current prices or their forecast of 1,000 dollars per ounce for 2010.

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