NEW YORK/SINGAPORE: Iraq made its first major move in years to boost its gold reserves in recent months, joining central banks from emerging market economies such as Brazil and Russia in diversifying its foreign reserves.
Central bank purchases have been one of the biggest drivers of gold’s rally since 2010 — a year which saw central banks turning net buyers of the precious metal for the first time in two decades amid growing doubts about the stability of the dollar as the world’s top reserve currency.
Over the course of three months between August and October this year, Iraq’s gold holdings quadrupled to 31.07 tonnes, the International Monetary Fund’s monthly statistics report showed on Thursday.
In the first change in its reserve in years, the country added some 23.9 tonnes in August, bringing the total to 29.7 tonnes. That was followed by a 2.3-tonne rise in September to 32.09 tonnes and then by a cut of 1.02 tonnes in October to 31.07 tonnes. There was no data for November. “It was interesting that Iraq bought gold,” a Sydney-based trader said yesterday.
“Gold bulls will cheer the news as more central bank buying will support gold prices in the future, but the market currently is a little distracted by other things, namely the US ‘fiscal cliff’ talks.”
Spot gold prices are set for their twelfth straight year of gains in 2012. Over this period gold gained the most, around 30 percent, in 2007 and 2010.
But right now gold is facing pressure from end-of-the-year fund liquidation and the uncertainty hanging over US talks to avert the “fiscal cliff” of tax hikes and spending cuts that would kick in early next year and threatens to tip the economy back into recession.
Reuters
