NEW YORK/SINGAPORE, Apr 25: Russia and Turkey raised their gold reserves in March, the International Monetary Fund said on Wednesday, increasing their holdings ahead of a spectacular plunge in prices this month which sent gold to its lowest in more than two years.
The gold price sank a combined $225 on April 12 and 15 in a sell-off that surprised ardent gold investors and bulls.
The drop was partly put down to the market being unnerved by news that Cyrpus was considering selling gold reserves to raise about 400 million euros ($520 million) to finance part of its bailout.
But ahead of this turbulence some central banks increased their reserves. The Russian Federation, the world’s 8th largest holder, lifted its gold reserve for a fifth straight month in March, adding 4.7 tonnes of gold to its reserves, which stood at 981.648 tonnes by the end of last month, the IMF data showed.
Turkey raised its holdings by 33 tonnes to 408.874 tonnes, and South Korea increased its holdings by 20 tonnes in February to 104 tonnes.
‘A couple of years ago, Russia said they would increase gold reserve in their portfolio to up to 10 percent. It is getting closer,’ said Yuichi Ikemizu, branch manager for Standard Bank in Tokyo.
‘From the way they buy gold, South Korea always buys it when the price comes off. With this sharp decline in the price, I think they are buying back.’
Gold has dropped about 14 percent this year, with prices also hit by investors in exchange-traded funds cutting exposure to it on prospects of easing inflation, even with lower prices attracting a rise in demand for jewellery and coins.
Analysts said central bank purchases and surging physical demand helped gold prices rebound from a two-year trough around $1,321 an ounce struck last week. Gold edged up at $1,433.56 an ounce in early trade on Thursday.
‘I think physical and central banks … Those buyers are supporting the market,’ said Ikemizu at Standard Bank, noting prices were already more than $100 higher.
Besides Russia and Turkey, Kazakhstan, Azerbaijan, Belarus, Greece, Kyrgyz Republic and Mongolia bought gold for their official reserves in March.
Tajikistan added 0.124 tonnes to its reserves in both February and March, taking its total to 6.446 tonnes. Republic of Serbia raised its holdings in February by 0.093 tonnes to 15.36 tonnes.
Canada cut its reserves by 0.03 tonnes to 3.203 tonnes last month, and Mexico cut its by 0.09 tonnes to 124.239 tonnes, the data showed. Belgium trimmed its holdings by 0.03 tonnes to 227.433 tonnes. ($1 = 0.7695 euros)
(AGENCIES)
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