Analysts are not reading too much into the preliminaries that gold reserves in the Eurozone increased in January based on the data released by the International Monetary Fund.
According to the figures compiled by the IMF, the Eurozone gold reserves increased by up to 7.437 tons to 10,791.885. However, the data still does not show which of the central banks actually bought gold as the data groups together all the central bank purchases including the European Central Bank.
It is very hard to determine the effect of the purchases will have on the gold market as there were still plenty of questions that requires answers.
It is not surprising that one or several central banks in Europe increased their reserves on that particular start of the year.
There is a high level of volatility and major currency swings wherein gold made some very strong gains. Gold most likely appeared as a an attractive investors for some central banks but it is still is not very clear since more information is needed before jumping to conclusions.
The most central banks in developed countries already have established very well their respective gold holdings and the growth in central bank purchases remains within the emerging market central banks that will continue to branch out from the U.S. dollar.
Based on the records of the IMF, three emerging market central banks that added to their respective reserves at the beginning of the year were Mauritius, Kazakhstan and the Ukraine. The figures show that its reserves increased by 1.7 tons to 193.5 tons. The Kazakhstan central bank has brought gold for 28 successive months respectively.
The Ukraine central bank was able to purchase 0.3 tons of gold to 23.9 tons. Its gold purchases came after the central bank was able to sell 14.3 tons of gold in October and 2.5 tons in November. Moreover, the Mauritius central bank bolstered its reserves by 1 ton to 8.9 tons.
Eurozone purchases gold while Russia and Turkey sell
Although there were some buyers of the yellow metal, IMF data reveals that there were more sellers at the beginning of the year.
The data further reveals that Russia was able to sell 0.5 tons of gold at the beginning of the year; however analysts noted that this decrease is irrelevant compared to the purchases seen in 2014 where the Russian central bank bought 165.74 tons of gold. Russia’s gold selling last January is also the same as last year when the central bank also sold 0.5 tons worth of gold in the same month.
Turkey’s central bank was considered the largest seller in the month of January as it reduced its reserves by 14.227 tons to 514.893 tons according to the data released by the IMF.
Investors should be very cautious when weighing changes in Turkey’s gold reserves since the central bank’s holdings also include commercial gold holds and for that very reason, the data can be extremely volatile.