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Central-Bank Gold Buying Seen Reaching 493 Tons in 2012 by GFMS

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Sept. 4 (Bloomberg) -- Central banks will increase gold purchases to 493 metric tons this year as they keep expanding reserves to diversify from the dollar and guard against a potential gain in inflation, Thomson Reuters GFMS said.

The banks bought 273 tons in the first half, 34 percent more than a year earlier, and will purchase 220 tons in the current half to raise the full-year total by 7.9 percent, the London-based researcher said today in a report. They bought 457 tons last year, GFMS said. Gross first-half purchases rose to 278 tons as sales slid 83 percent from a year earlier to 5 tons.

“We expect the official sector to remain a significant gold buyer for some time to come,” GFMS said. “Although we expect to see continued purchases, a more aggressive scale of acquisitions than current levels is highly unlikely due to the limited size of the gold market, particularly when compared with some countries’ foreign-exchange holdings.”

Bullion lending by central banks has remained “broadly flat” after the first increase in more than a decade last year, the researcher said. There was growth in “very short-term” lending from certain central banks to earn extra yields as well as to avoid storage charges, said GFMS, a unit of Thomson Reuters Corp.

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To contact the reporter on this story: Nicholas Larkin in London at nlarkin1@bloomberg.net

To contact the editor responsible for this story: Claudia Carpenter at ccarpenter2@bloomberg.net.

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