Russian CB to Buy 30 Tons of Gold from Gokhran
Source: Reuters, Polina Devitt and Robin Paxton (12/12/09)
"Gokhran. . .cancelled plans to sell the gold on the open market after information about the sale leaked."
Central banks worldwide are building up their gold reserves as the metal trades near record highs. Gokhran, the Russian repository, cancelled plans to sell the gold on the open market after information about the sale leaked.
"The primary aim is to make sure this gold doesn't hit the market and influence prices," said Olga Okuneva, metals and mining analyst at Deutsche Bank in Moscow. "It's also a way for the Russian central bank to diversify more into gold."
Russia had planned to sell between 20 and 50 tons on the open market to help plug a budget deficit incurred during its first recession in a decade. The economy has since shown some signs of early recovery, in line with a rebound in oil prices.
With gold trading at record highs of $1,226.10/oz. last week, boosted by a weaker dollar, analysts said Russia would be reluctant to sell the metal abroad or to push prices down by releasing a large quantity to the market.
Thirty tons, or 964,522 ounces, is equivalent to 16% of Russia's gold production last year or up to 1.25% of global consumption of the metal.
The source at Gokhran, speaking on condition of anonymity, said Russian President Dmitry Medvedev signed a decree on Dec. 7 approving the sale. "Next week, I think, we will conclude everything," the source told Reuters. Finance Minister Alexei Kudrin first announced the sale on Nov. 18, saying Gokhran—which falls under his ministry's watch—would sell at market price and use some of the proceeds to buy diamonds from state-run miner Alrosa.