Saturday, August 4, 2012

South Korean Central Bank adds to Gold Holdings


Original source

Aug 2 (Reuters) - South Korea boosted its gold holdings by nearly a third in July, buying 16 tonnes as part of the central bank's efforts to diversify its massive foreign exchange reserves. South Korea is Asia's fourth largest economy and its central bank said on Thursday that it now holds 70.4 tonnes of gold, after paying $810 million last month for the purchase.

The increase barely lifted gold prices but supported expectations that central banks will remain gold's key buyer as increased volatility in global markets and waning confidence in the U.S. dollar fuel a global drive to vary foreign reserves away from the U.S. currency and government debt securities.

The latest purchase was the third by the Korean central bank since June last year, when it started increasing its reserves after leaving them unchanged for more than a decade. In the last 13 months, South Korea's gold reserves have grown five-fold but remain only a fraction of China's over 1,000 tonnes and Japan 765 tonnes, according to the World Gold Council (WGC). Central banks bought 80.8 tonnes of gold in the first quarter, adding to 2011 purchase of more than 450 tonnes, the WGC said.

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After weeks of waiting to see what the FED and ECB would do to stimulate economic growth - Both agencies apparently have decided to also wait and see. Wall Street reaction was immediate as stocks tumbled. The Dow Jones and Standard and Poors indices dropped nearly 1 percent in volume with minus 100 points and 12 points respectively. Both the US Federal Reserve and the European Central bank had indicated so plan was in the works to create movement but as of Thursday investor got a big fat zero.