Central banks on gold buying spree
Central banks accounted for 16 per cent of the total sale of 990 tonnes of the yellow metal sold in the second quarter of this year.
The buoyant demand from the central banks was in contrast to that of jewellery and investment sectors. The overall global demand for gold was down seven per cent to 990 tonnes in the June quarter. This was largely due to subdued demand in India and China, which together account for 45 per cent of global demand.
The looming Euro Zone financial crisis and a lack of significant improvement in the US economy have led to central banks across the globe parking part of their reserves in gold. Some of the central banks have indicated that they want to bolster their gold reserves to reduce their reliance on the US dollar as a reserve asset.
Russia's central bank added 22 tonnes of gold to its reserves in the June quarter, taking its total holding to 918 tonnes, roughly nine per cent of its total reserves. South Korea's central bank announced this month that it had purchased 16 tonnes of gold in July, according to WGC. This purchase takes its gold reserves to 70 tonnes, about one per cent of its total reserves. The bank had increased its holding by 56 tonnes in the June quarter last year to diversify its portfolio.
In 2009, the Reserve Bank of India bought 200 tonnes of gold at $6.70 billion (about Rs 31,490 crore as per the then exchange rate) from the International Monetary Fund which had put 403 tonnes on sale to central banks. As of August, the RBI had 558 tonnes of gold in its reserves, which accounts for 10 per cent of its total reserves.
It is ranked eleventh among the top 100 gold-holding countries. The central bank of the US leads the table with a holding of 8,133 tonnes of gold, which is 75 per cent of the country's total reserves. Central banks across the globe hold 31,353 tonnes of gold as reserves.