* Turkey's January gold holdings down 31.171 T at 488.578 T
* Euro area raises holdings by 7.776 T to 10,787.434 T
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By Jan Harvey and Manolo Serapio Jr
LONDON/SINGAPORE, Feb 25 Gold holdings at
Turkey's central bank fell by a hefty 31.171 tonnes in January,
data from the International Monetary Fund showed, in a move
analysts say may show commercial banks took bullion off deposit
as the lira crashed.
Uniquely among central banks, Turkey counts gold held on
deposit with it by commercial banks as part of its bullion
holdings. That means outflows from those holdings do not
necessarily reflect central bank selling.
Turkey's bullion holdings were down 6 percent month-on-month
at 488.578 tonnes in January, preliminary IMF data showed on
Tuesday. The drop followed a series of increases in the
country's holdings last year.
"This almost certainly reflects domestic banks taking gold
off deposit with the central bank," Thomson Reuters GFMS' head
of research Rhona O'Connell said.
"It is this deposit activity that has been responsible for
most - in fact probably all - of the increase in the central
bank's reported gold reserves since the policy was implemented
in the first half of 2011."
Commercial banks need to hold a certain ratio of their
assets on deposit with the central bank in the country in which
they are based, usually in the form of cash. Taking gold off
deposit means they are choosing to replace some of the deposits
they currently hold at the central bank with cash.
The Turkish lira sank in January as a crisis in emerging
markets sparked heavy selling of the currency, hitting a record
low of 2.39 versus the dollar on Jan. 27. That prompted the
central bank to hike interest rates dramatically.
Weakness in the lira lifted the price of gold denominated in
the Turkish currency. The country's gold imports plunged last
month to just 6 tonnes, from 31.6 tonnes in December.
Turkey is the world's 12th-largest holder of gold as part of
the central bank's reserves, according to the World Gold Council
(WGC), which represents producers.
The IMF said the euro area increased its gold holdings by
7.776 tonnes to 10,787.434 tonnes in January. Gold reserves by
Germany, the world's second-largest holder, were unchanged at
3,387.247 tonnes while top-ranked United States held steady at
Gold holdings by central banks are closely watched since the
group became net buyers in 2010 after two decades as net
sellers. The 2008 global economic crisis triggered a wave of
official-sector interest in gold.
Official-sector buying reached a 48-year high in 2012 at
544.1 tonnes, WGC data showed, but dropped to a three-year low
of 368.6 tonnes last year, driven in part by price volatility.
Spot gold was at $1,334.20 an ounce by 1245 GMT,
having hit a near four-month high in the prior session,
underpinned by worries over the global economy including in
China, where reforms are under way to shift to more
(Editing by Himani Sarkar, Veronica Brown and Dale Hudson)