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Russia Increases Gold Holdings With Kazakhstan for 11th Month

Russia and Kazakhstan expanded their gold reserves for an 11th straight month in August as bullion prices rallied. Mexico reduced its holdings.

Russian assets gained 12.7 metric tons to 1,015.5 tons, International Monetary Fund data showed today. Kazakhstan’s reserves rose 2.5 tons to 134.5 tons and Turkey added 23.4 tons to 487.4 tons, the data showed.

Gold advanced 5.3 percent in August, the second straight monthly gain and longest rally since September last year, as lower prices boosted demand amid mounting concern about military action against Syria. Investors sold 16.8 tons from gold-backed exchange-traded products in August, the smallest outflow this year, according to data compiled by Bloomberg.

Central banks are “long-term holders of gold, with a long-term view and prices at the moment are pretty attractive for a long-term buyer,” said Victor Thianpiriya, an analyst at Australia & New Zealand Banking Group Ltd. (ANZ) in Singapore. “The fact that they’re doing it in smaller volumes is consistent with the fact that sentiment towards gold is getting a bit more negative.”

Gold for immediate delivery rose 0.3 percent to $1,326.79 an ounce at 2:48 p.m. in Singapore. Prices are set to gain 7.5 percent this quarter, the first advance in a year.

Annual Drop

The metal is heading for the first annual drop in 13 years as signs of a U.S. recovery and speculation the Federal Reserve may curb stimulus hurt gold demand while stocks and the dollar climb. Gold’s 21 percent slump compares with a 2.9 percent advance in the dollar and 13 percent gain in equities.

Bullion rose 70 percent from December 2008 to June 2011 as the U.S. Federal Reserve pumped more than $2 trillion into the financial system by purchasing debt, increasing investors’ concern about currency debasement and accelerating inflation. Fed Chairman Ben S. Bernanke said there is no fixed schedule for tapering after the central bank unexpectedly maintained $85 billion a month in asset purchases this month.

While that decision may help gold prices in the short-term, bullion may drop below $1,250 before the end of the year, Citigroup Inc. said this week. Central bank purchases may total 370 tons in 2013, 30 percent less than a year earlier, it said. Nations added 534.6 tons to reserves last year, the most since 1964, according to the World Gold Council.

Azerbaijan, the Kyrgyz Republic and Ukraine also added to reserves in August, the IMF data show. Mexico reduced its holdings for a 16th month to 123.6 tons and the Czech Republic also sold, according to the data.

To contact the reporters on this story: Phoebe Sedgman in Melbourne at psedgman2@bloomberg.net; Glenys Sim in Singapore at gsim4@bloomberg.net

To contact the editor responsible for this story: James Poole at jpoole4@bloomberg.net

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