Turkey Boosts Gold Reserves

December 23, 2011 at 16:28

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Turkey lifted its gold reserves by a hefty 1.328 million troy ounces, or 30 percent, last month as central banks around the world maintained their positions as net buyers of the precious metal.

According to data from the International Monetary Fund, the Turkish central bank increased its gold reserves to 5.758 million ounces in November, from 4.429 million ounces the month prior. This followed a rise of 697,000 ounces in October, the latest IMF figures show.

While the Turkish central bank wasn’t available for immediate comment Friday regarding its recent reserve increases, it announced in November that it had begun to accept gold in its reserve requirements from commercial banks. Under the policy change, banks are allowed to hold a maximum 10 percent of their Turkish lira reserve requirements in gold, which it said would free up around 5.5 billion lira ($2.91 billion) in liquidity to the market.

Prior to the purchases, Turkey had the 30th-largest official holding of gold in the world, at around 7 percent of its foreign reserves, according to the World Gold Council, an industry body. It is now likely to have the 22nd-largest official holdings following the additions.

Meanwhile, Russia also continued its program of gold accumulation in November, lifting its holdings a further 81,000 ounces to 28.086 million ounces. Russia’s reserves, having been added to every month so far in 2011, are now up 11 percent on the start of the year.

In January the Central Bank of Russia’s press service said the bank planned to buy 100 metric tons, or around 3.2 million ounces, of gold per year from domestic banks in order to bolster reserves. Russia is the world’s eighth-largest official holder of the precious metal, which accounts for around 9 percent of its foreign reserves.

Emerging market central banks have been buying gold in reaction to the sovereign-debt crises affecting the U.S. dollar and the euro, analysts say. Demand has also risen strongly in recent quarters as some seek to diversify foreign-exchange reserves that have grown along with emerging market export industries.

Tajikistan last month added 10,000 ounces of gold to its reserves, counterbalancing a reduction of 12,000 ounces reported the prior month. Its reserves now stand at 150,000 ounces, according to IMF data.

Macedonia, Belarus, Mauritius, and Greece also reported small additions to their reserves for November, while Mexico and Slovenia recorded minor reductions.

Metals consultancy GFMS recently forecast that central banks could buy nearly 500 metric tons, or around 16 million ounces, of gold this year.

Total central bank gold purchases in the third quarter were more than double the level in the second quarter and almost seven times higher than the same period of last year, at 148.4 metric tons, or 4.8 million ounces, according to a report last month from the WGC. The body said it expects central banks to continue to be net buyers of gold in the fourth quarter, as well as next year.

Purchases by the official sector have helped to drive the price of gold higher this year, not only by absorbing supply but through the positive boost they have given to market sentiment.