Russia, Kazakhstan extend gold purchases as prices tumble

08:41, 29 May 2013

ASTANA. May 29. KAZINFORM Russia and Kazakhstan expanded their gold reserves for a seventh straight month in April, buying the metal to diversify assets even as prices slumped the most in three decades.

Russian holdings, the seventh-largest by country, climbed 8.4 metric tons to 990 tons, taking gains this year to 3.4 percent after expanding by 8.5 percent in 2012, International Monetary Fund data show. Kazakhstan's hoard grew 2.6 tons to 125.5 tons, taking the increase to 8.9 percent this year after a 41 percent expansion in 2012, data on the website showed.

Gold plunged into a bear market April 12 and by the end of the following session had lost 14 percent, the biggest two-day drop since 1983. The drop was driven by some investors losing faith in the metal as a store of value, spurring record reductions from holdings in exchange-traded products amid speculation that the global economy is recovering.

"Some central banks would have taken advantage of the lower prices to build their gold assets," said Alexandra Knight, an economist at National Australia Bank Ltd. in Melbourne. "With the general mood in the market quite bearish, perhaps some others are factoring in the potential for lower prices and holding off purchases for now. But the longer-term trend for central banks to increase gold reserves remains intact."

Gold for immediate delivery, which dropped to a two-year low of $1,321.95 an ounce on April 16, traded 0.4 percent higher at $1,391.43 at 10:53 a.m. in Singapore. Bullion has declined 17 percent in 2013 after advancing for the past 12 years, Kazinform refers to Bloomberg.

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