• Central bank buying `shows no sign of stopping,' Wendt says
  • Gold prices recovered after slumping to 5-year low in July

Kazakhstan increased its gold reserves for a 36th month in September as Russia and Ukraine added to their holdings, according to data published by the International Monetary Fund.

Kazakhstan purchased 3.22 metric tons to take its stash to about 213.46 tons, while Russia boosted holdings to 1,352.22 tons from about 1,317.73 tons, data on the IMF’s website showed. Ukraine expanded its reserves to 27.06 tons as Mexico cut them for a 15th month, the figures showed. Turkey pared holdings to 504.5 tons in September from 517.6 tons the previous month.

Russia, Kazakhstan and Ukraine bought bullion along with China as prices dropped 1.8 percent last month amid speculation that U.S. interest rates would be increased by the end of the year. Central banks will probably remain net buyers as emerging-market institutions continue to boost their allocation, while developed countries are reluctant to sell, Barclays Plc said in an Oct. 21 report.

“The trend of central-bank gold buying is consistent,” Gavin Wendt, founding director and senior resource analyst at MineLife Pty Ltd. in Sydney, said by e-mail before the data was released. “It all reflects a desire to diversify reserves away from the U.S. dollar.”

China Buying

China, which rivals India as the biggest gold consumer, said Oct. 16 it increased holdings to about 1,709 tons in September. In July, the People’s Bank of China ended six years of mystery surrounding its reserves, revealing a 57 percent jump in gold assets since 2009 to about 1,658 tons, overtaking Russia to become the fifth-largest holder.

Many central banks remain exposed to a small number of key reserve currencies and look to gold as a hedge, according to the World Gold Council. China has less than 2 percent of its foreign reserves in bullion, compared with 73 percent for the U.S. and about 68 percent for Germany.

Prices have recovered after dropping to the lowest level in more than five years in July almost to erase the year’s losses. Spot bullion traded at $1,164.11 an ounce at 7:56 a.m. in Singapore on Tuesday, 1.7 percent lower for the year.

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