Brazil raised its gold reserves for a second month in October to the highest level in more than 11 years as emerging nations from Kazakhstan to Russia boosted holdings by more than 40 metric tons.
Brazil’s holdings expanded 17.2 tons last month to 52.5 tons, the most since January 2001, according to data on the International Monetary Fund’s website. The country’s 1.7-ton purchase in September was the first since December 2008. Kazakhstan’s holdings increased 7.5 tons, Russia added 0.4 ton and Turkey’s reserves rose 17.5 tons, the data show. Germany, the second-biggest holder, after the U.S., cut gold holdings by 4.2 tons, the first reduction since June.
Central banks have been expanding reserves as the metal heads for a 12th straight annual gain and investors hold a record amount in bullion-backed exchange-traded products, data compiled by Bloomberg show. Nations bought 373.9 tons in the first nine months of the year and full-year additions will probably be in the “bottom end” of 450 to 500 tons, the London-based World Gold Council estimates.
“This is a chunky purchase by a central bank, and the gold market will likely sit up and pay attention,” Edel Tully, an analyst at UBS AG in London, wrote today in a report, referring to Brazil’s addition. “Today’s news confirms much of the market chatter at the time that official sector buying was taking place and was one of the key factors that gave prices a reasonable floor last month.”
Germany holds 3,391.4 tons, the IMF data show. The Bundesbank declined to comment on the past month’s gold reserves, spokeswoman Susanne Kreutzer said, adding that the central bank reserves 7 tons a year to sell to the Finance Ministry for minting. The year started on Sept. 27, she said. The Bundesbank sold about 0.7 ton to the finance ministry in June and 4.7 tons in October 2011 to mint commemorative coins.
Gold for immediate delivery was little changed at $1,726.99 an ounce by 10:57 a.m. in London. It’s gained 10 percent this year. Holdings in gold-backed ETPs reached a record 2,604.9 tons yesterday, data compiled by Bloomberg show.
“The IMF figures showed continued strong buying by central banks,” said Dan Smith, a commodities analyst at Standard Chartered Plc in London. “This continues the trend of recent months and we expect this to support gold prices.”
Turkey’s bullion holdings have increased due to it accepting gold in its reserve requirements from commercial banks. Belarus expanded holdings by 0.1 ton in October and Mexico reduced them by 0.2 ton, the IMF data show.
Gold accounts for about 0.5 percent of Brazil’s total reserves and 20 percent of Kazakhstan’s, according to the World Gold Council. That compares with more than 70 percent for the U.S. and Germany, the biggest bullion holders, the data show.