World's central banks want more gold as India joins spree

SINGAPORE (April 24)   India’s central bank is likely to join counterparts in Russia and China scooping up gold this year, adding to its record holdings and lending support to worldwide bullion demand as top economies diversify their reserves.

The Reserve Bank of India’s purchases are part of a wider picture across developing economies that are looking at de-dollarising their foreign-exchange reserves, according to Ross Strachan at Capital Economics. The RBI’s buying trend can be sustained for a number of years in relatively small quantities, as part of a long-term diversification, he said.

The RBI may purchase 1.5-million ounces in 2019, or about 46.7 t, according to Howie Lee, an economist at Oversea-Chinese Banking, with an outlook based on extrapolating amounts bought in the first two months of this year.

The RBI increased its stash by about 42 t last year, and after adding more in January and February, the country’s gold reserves now stand at a record high of almost 609 tons, according to data from the International Monetary Fund. Russia bought 274 t in 2018 and has added more this year, while China’s central bank is on a renewed buying spree that began in December. Global official sector gold purchases could reach 700 t in 2019 led by these countries as well as Kazakhstan, Iran, and Turkey, according to Citigroup.

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