RUSSIA Hoarded GOLD in MAY 2012

It´s official.


Russia lifts gold reserves by 498,000 ounces in May -- Fall in gold price attracts central bank buying -- Gold price not expected to lift significantly without increased buying activity from other parts of the market (Adds further detail and analyst comment throughout.) By Rhiannon Hoyle and Francesca Freeman SYDNEY--The central banks of Russia, Ukraine and Kazakhstan actively boosted their gold reserves in May as the price of gold declined amid anxiety over the euro-zone debt crisis. Emerging markets' central banks have bought gold in reaction to the sovereign debt crises affecting traditional reserve currencies such as the dollar and the euro. This has become an important support for gold prices, as it not only absorbs supply but boosts investor sentiment toward the metal, market participants say. Russia, a regular buyer in its domestic market, lifted its gold reserves by 498,000 troy ounces in May, International Monetary Fund data showed Tuesday. Russia's reserves stood at 29.300 million ounces at the end of the month. Ukraine increased its holdings by 66,000 ounces to 1.050 million ounces--a third consecutive monthly increase in its official gold reserves--while Kazakhstan's central bank registered its sixth consecutive monthly increase, boosting its reserves by 58,000 ounces to 3.215 million ounces, IMF data showed. Turkey, which last year began to accept gold as collateral from commercial banks, also reported a substantial increase in its holdings--by 183,000 ounces to 7.876 million ounces. The banks bought gold as its price slumped due to growing anxiety over the euro-zone debt crisis and the outlook for debt-laden peripheral nations like Greece. The average PM fixing for gold in May was $1,585.50 an ounce, its lowest level since July 2011, London Bullion Market Association data showed. "Central banks do time purchases and will seek to add to their positions when it is advantageous to do so," Marcus Grubb, managing director of the World Gold Council, told Dow Jones Newswires in a recent interview. According to the WGC, the high price of gold in the early part of 2012 contributed to a 41% drop in official sector gold purchases in the first quarter of this year. Still, central bank buying alone isn't expected to significantly energize the gold market, which is currently suffering from low trading volumes amid a lack of buying interest from both speculative and physical investors. Physical demand from India--usually a key support to prices--has been particularly disappointing of late due to the weakness of the rupee versus the greenback, which is making dollar-denominated gold less affordable to Indian buyers. Meanwhile, speculative gold investors have been keeping to the sidelines amid heightened macroeconomic uncertainty. "While central bank buying is supportive of prices and lends a certain amount of optimism to the market, it isn't actually going to push prices higher," said David Govett, head of precious metals at Marex Spectron. "Central banks have been net buyers for a while now and the market is fairly inured to these stories, so while they provide a glimmer of hope for the bulls, they do not give any immediate reason to buy gold." Several countries such as the Philippines and Tajikistan, both of which have added to their reserves considerably in recent months, are yet to formally report their activity to the IMF. Write to Rhiannon Hoyle at rhiannon.hoyle@wsj.com and Francesca Freeman at Francesca.freeman@dowjones.com (END) Dow Jones Newswires June 26, 2012 08:03 ET (12:03 GMT)2012 Dow Jones & Company, Inc.