RUSSIAN BUYING GOLDRussian Central Bank to buy 30 tonnes of gold from Gokhran
Russia'sCentral Bank will increase its gold holdings by around 5% by buying 30tonnes of gold from the State repository which had been planning tosell the gold on the open market.
Author: Polina Devitt and Robin Paxton
Posted:Saturday,12 Dec 2009
MOSCOW (Reuters) -
Russia's state repository will sell 30 tonnes of gold worth $1billion to the central bank next week, a source at the body said onFriday, keeping the metal inside Russia after rethinking a plan to sellit on the market.
Central banks worldwide are building up their gold reserves as themetal trades near record highs. Gokhran, the Russian repository,cancelled plans to sell the gold on the open market after informationabout the sale leaked.
"The primary aim is to make sure this gold doesn't hit the marketand influence prices," said Olga Okuneva, metals and mining analyst atDeutsche Bank in Moscow. "It's also a way for the Russian central bankto diversify more into gold."
Russia had planned to sell between 20 and 50 tonnes on the openmarket to help plug a budget deficit incurred during its firstrecession in a decade. The economy has since shown some signs of earlyrecovery, in line with a rebound in oil prices.
With gold trading at record highs of $1,226.10 per ounce last week,boosted by a weaker dollar, analysts said Russia would be reluctant tosell the metal abroad or to push prices down by releasing a largequantity to the market.
Thirty tonnes, or 964,522 ounces, is equivalent to 16 percent ofRussia's gold production last year or up to 1.25 percent of globalconsumption of the metal.
The source at Gokhran, speaking on condition of anonymity, saidRussian President Dmitry Medvedev signed a decree on Dec. 7 approvingthe sale. "Next week, I think, we will conclude everything," the sourcetold Reuters. Finance Minister Alexei Kudrin first announced the saleon Nov. 18, saying Gokhran -- which falls under his ministry's watch --would sell at market price and use some of the proceeds to buy diamondsfrom state-run miner Alrosa.
Kudrin, speaking to Reuters on Friday, said the sale would take place by the end of the year. He gave no more details.
Russia holds the world's third-largest gold and foreign exchangereserves -- $451.2 billion as of Dec. 4. It is also the world'sfifth-largest gold miner, ranking between Australia and Peru, with an 8percent share of global production.
The central bank held 19.5 million ounces of gold, or more than $20 billion worth, in its reserves as of Nov. 1.