By Krista Hughes and Boris Groendahl
VIENNA, April 6 (Reuters) - A European cap on central bank gold sales is no longer as relevant as it was given current high gold prices, European Central Bank Governing Council member Ewald Nowotny told Reuters on Monday.
The Central Bank Gold Agreement was established by key European central banks around ten years ago to stabilise gold prices which had fallen below $300 an ounce, partly due to frequent central bank sales.
Speculation is rife over whether members of the agreement, which include the European Central Bank, will agree to extend it when it expires in September.
"In the given situation it is not very relevant whether it is agreed or not, basically it still has to be discussed," Nowotny told Reuters in an interview.
Gold hit a record high of $1,030.80 an ounce in March 2008
and last month rose back above $1,000, boosted by safe haven
demand. Spot gold
"The gold agreement had the intention to prevent the central banks selling gold too fast and lead to distortion of the gold market," said Nowotny.
"Now with gold prices as high as they are I think there is not a real danger of a collapse of gold prices."
Under the terms of the Central Bank Gold Agreement, signed in 1999 by key European institutions including Germany's Bundesbank and the European Central Bank and renewed in 2004, members can sell up to 500 tonnes of gold a year.
But in the fourth year of the latest agreement, sales fell well short of this ceiling, to just over 357 tonnes.
Nowotny said he expected signatories of the agreement would reach a decision before the summer. "What will be the actual outcome is still open for discussion," he said. (Writing by Sarah Marsh, Additional Reporting by Jan Harvey; Editing by Andy Bruce)