* 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 (Releads, adds detail, comment)
By Jan Harvey and Manolo Serapio Jr
LONDON/SINGAPORE, Feb 25 (Reuters) - 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 8,133.715 tonnes.
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 consumption-led growth. (Editing by Himani Sarkar, Veronica Brown and Dale Hudson)