* Thailand adds nearly 19 T to reserves in June -IMF
* Russia buys, Kazakhstan makes third buy of 2011
(Writes through, adds comment, details)
By Amanda Cooper
LONDON, Aug 3 Central banks of emerging market
countries such as Korea and Thailand have added more than $10
billion of gold to their reserves this year in a sign of waning
faith in the West's benchmark bonds and currencies like the
dollar and the euro.
International Monetary Fund data for June on Wednesday
showed Thailand bought gold for the second time this year,
raising its reserves by nearly 19 tonnes to over 127 tonnes,
while Russia bought another 5.85 tonnes, bringing its reserves
to 836.7 tonnes, the world's eighth largest official stash of
So far in 2011, emerging market central banks have bought
nearly 180 tonnes of gold, more than double the roughly 73
tonnes purchased by central banks globally in the whole of 2010.
The spot price of gold has risen by more than 17
percent this year to a record $1,672.65 an ounce, driven chiefly
by investor concerns over the impact on the developed world's
economy of its debt burdens and sluggish growth.
Mexico has been the largest buyer of gold in the year to
date, with $5.3 billion worth of purchases, or 98 tonnes of
gold, followed by Russia, which has bought 48 tonnes, worth $2.6
billion at current prices.
Earlier this week, Korea confirmed it had bought 25 tonnes
of gold in June and July.
"Central banks evidently do not regard the price level as
too high and are diversifying their currency reserves. This was
the first purchase of gold for the Korean central bank in over
ten years," said Commerzbank metals analyst Daniel Briesemann.
"Gold's high-altitude flight still appears to be supported
by many factors and an end to the boom soon is not in sight."
In the euro zone, smaller economies such as Greece, Portugal
and Ireland have already sought emergency funding, while concern
is mounting over the finances of some of the region's larger
members such as Spain and Italy, driving the euro to record lows
against the safe-haven Swiss franc .
The United States averted an unprecedented debt default on
Tuesday after lawmakers reached an eleventh-hour deal to raise
the country's borrowing limit, although severe doubts remain
about the economic outlook, stripping 6 percent off the value of
the dollar this year.
The U.S. economy is also likely to lose its top-notch credit
rating as ratings agencies are increasingly discomfited by the
weight of the twin trade and budget deficits and the country's
A downgrade will almost certainly push up yields on U.S.
Treasury notes as their value falls, which could prove unwelcome
to the major investors in U.S. debt such as the Chinese
government, which holds nearly $900 billion in Treasuries.
The trend among central banks, particularly those with large
foreign exchange holdings, to diversify some of their portfolios
into gold from currencies has been well established over the
last couple of years.
"The market generally expects central banks with growing
reserves and small gold holdings to buy gold," said Jesper
Dannesboe, senior commodity strategist at Societe Generale."
"So I don't think that is particular surprising, but it does
support the bullish story (for gold)," he said.
Central banks are expected to remain net buyers of gold this
year and the most likely buyers will be those with the biggest
reserves and relatively small bullion holdings, such as China.
The Chinese central bank is the sixth largest official owner
of gold, yet its holdings account for just 1.6 percent of its
$2.5 trillion total reserves.
The IMF data showed Russia, Kazakhstan, Greece, Ukraine and
Tajikistan also added to their reserves two months ago and
feature among some of the bigger bullion buyers this year.
Kazakhstan's reserves rose for the third time this year, by
3.11 tonnes in June to 70.434 tonnes, Taijikistan's reserves
rose 0.04 tonnes to 3.036 tonnes and Greece and Ukraine added
0.03 tonnes each, bringing their official holdings of gold to
111.506 tonnes and 27.744 tonnes, respectively.
Russia has added to its gold reserves every month for the
past five years, according to the IMF's data.
(Reporting by Amanda Cooper; Editing by Anthony Barker)