Gold price on the rise prompted by Central Bank purchases

YEREVAN, April 25. / ARKA /. Gold climbed to its highest in more than a week on Thursday, boosted by prospects of more central bank buying after a recent steep sell-off in the precious metal, while a firmer euro also underpinned prices, according to Reuters.

Central bank purchases and surging physical demand helped gold bounce fr om a two-year trough around $1,321 an ounce hit last week, dealers said. But daily outflows from exchange-traded funds, reflecting sagging investor confidence, capped gains.

According to the latest data released by the IMF on Thursday, the increase in the holdings of Russia, Turkey, Azerbaijan and Kazakhstan totaled 1.32 million troy ounces; at end of March, that metal would have been worth $2.1 billion, Novosti Armenia reports citing RIA Novosti.

At current prices of $1,440/oz, it is now worth $1.9 billion, although at last week's low, these banks' theoretical losses would have been as high as $336 million. Russia, which has been a regular buyer of gold in recent years, added 151,000 ounces to its stocks, bringing its reserves to 31.6 million ounces.

Kazakhstan was also a buyer, adding 39,000 ounces of gold to its now-3.95 million-ounce stockpile. It was its sixth consecutive month of purchases from the gold market.

"Physical buying has been strong but the question is wh ere are these buyers are coming from? There could be a fundamental shift from commercial buying of paper assets into physical gold. If that's the case, gold prices may continue to go up," said Joyce Liu at Phillip Futures.

Gold is generally regarded by investors as a more reliable alternative to volatile currencies and shares subject to severe fluctuations. The prices for this precious metal have been rising for 12 consecutive years. However, in 2012 the growth was the lowest in the last four years - 7%. In March of this year, the price of gold rose by 1.1%, but for the entire first quarter it dropped 4.8%. -0-