Net gold purchases of Central Banks reached 122.4 tons in the first quarter of this year, comfortably within the range of buying that has been in place for the last three years, said World Gold Council (WGC).
According to WGC, the biggest surprise of the quarter was the announcement in March from the Central Bank of Iraq that it had recently increased reserves by 36 tons. This follows comments in January by Muneer Omran, general manager of investments, that “Iraq has no plans to sell gold from its reserves”; although it was reported in April that it would mint 11t for sale domestically.
The announcement of a substantial increase in Iraqi reserves, along with continued buying from countries such as Russia (6 tons) and Kazakhstan (5 tons) in the first quarter, demonstrates the continued desire among central banks to accumulate gold for diversification purposes. Gold holdings in the euro area also increased by 7.7 tons in Q1 2014, as Latvia joined the currency union at the start of the year (1.1 tons of which was transferred to the ECB).
Meanwhile, Germany remains the only active signatory of the Central Bank Gold Agreement (CBGA), owing to its coin-minting program. During the first quarter it reduced its holdings by less than a ton for this purpose.