Central banks of countries trying to move away from dollar reserves are buying up gold in amazing numbers. Russia, Turkey and Kazakhstan were leaders in increased gold buying last, reports Henry Sanderson in the Financial Times. He goes on to write:
Central banks bought a net $27bn worth of gold, driven by Russia, whose net purchases were the highest on record, according to the World Gold Council, an industry-backed body. Volumes came to 651.5 tonnes, an increase of 74 per cent on the previous year.
The buying reflects continued efforts by emerging market central banks to diversify their large holdings of dollar reserves in the face of rising global trade tensions. The share of central bank currency reserves held in the dollar fell close to a five-year low in the third quarter of 2018, according to the International Monetary Fund.
The purchases helped boost the price of gold in the second half of last year, following a 10 per cent fall in the first half of 2018. Gold prices hit their highest level in eight months on Tuesday at $1,314 a troy ounce.
“A lot of emerging market central banks have had significant dollar exposure; they need to manage that risk through having an allocation to gold,” said Alistair Hewitt, head of market intelligence at the World Gold Council.
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