Russian Central Bank to buy 30 tonnes of gold from Gokhran
Russia's Central Bank will increase its gold holdings by around 5% by buying 30
tonnes of gold from the State repository which had been planning to sell 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 $1 billion to the
central bank next week, a source at the body said on Friday, keeping the metal
inside Russia after rethinking a plan to sell it on the market.
Central banks worldwide are building up their gold reserves as the metal trades
near record highs. Gokhran, the Russian repository, cancelled plans to sell the
gold on the open market after information about the sale leaked.
"The primary aim is to make sure this gold doesn't hit the market and influence
prices," said Olga Okuneva, metals and mining analyst at Deutsche Bank in
Moscow. "It's also a way for the Russian central bank to diversify more into
gold."
Russia had planned to sell between 20 and 50 tonnes on the open market to help
plug a budget deficit incurred during its first recession in a decade. The
economy has since shown some signs of early recovery, 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 to sell the metal abroad
or to push prices down by releasing a large quantity to the market.
Thirty tonnes, or 964,522 ounces, is equivalent to 16 percent of Russia's gold
production last year or up to 1.25 percent of global consumption of the metal.
The source at Gokhran, speaking on condition of anonymity, said Russian
President Dmitry Medvedev signed a decree on Dec. 7 approving the sale. "Next
week, I think, we will conclude everything," the source told Reuters. Finance
Minister Alexei Kudrin first announced the sale on Nov. 18, saying Gokhran --
which falls under his ministry's watch -- would sell at market price and use
some of the proceeds to buy diamonds from 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 exchange reserves --
$451.2 billion as of Dec. 4. It is also the world's fifth-largest gold miner,
ranking between Australia and Peru, with an 8 percent 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.
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