Sales of gold by European central banks and the International Monetary Fund have fallen to their lowest annual level since an agreement governing such transactions was ratified in September 1999, the World Gold Council said Tuesday.

Signatories to the agreement sold a gross 1.1 metric tons of gold in the 12 months ending Sept. 26.

The current agreement permits signatories to sell 400 metric tons of gold collectively per year.

European signatories showed a similar unwillingness to sell gold in the prior year of the agreement, selling just 7.1 metric tons of the permitted 400 metric ton ceiling.

Total sales in the latest year of the agreement reached 53.3 metric tons, due to the additional 52.2 metric tons of gold sold by the IMF as part of its limited gold sales programmes. The IMF completed its gold sales programme in December 2010.

European central banks' appetite for gold sales has dissipated since the onset of the financial crisis, said Natalie Dempster, director of government affairs at the World Gold Council.

During periods of such intense economic and financial market turbulence gold adds much needed stability to a central bank's reserves. This is also evident from the behaviour of emerging market central banks over the past two years who have accumulated significant additional volumes of gold. As a whole, central banks are now large net buyers of gold having re-evaluated their reserve asset management policies and we expect them to remain so for the foreseeable future.