Holdings in gold-backed exchange-traded products, or ETPs, rose 0.1 percent to 2,448.64 metric tons on Aug. 24, data tracked by Bloomberg show. Billionaire investors George Soros and John Paulson increased their stakes in the SPDR Gold Trust, the biggest gold-backed ETP, in the second quarter, U.S. Securities and Exchange Commission filings showed Aug. 14.
Central banks will purchase close to 500 tons this year after becoming net buyers in 2009, according to the producer- funded World Gold Council. Central banks added 254.2 tons to their holdings in the first half, according to the council, as countries from Russia to South Korea added to reserves.
"There is official interest in gold and central banks are buying, from Russia to Korea," said Jeremy East, global head of metals trading at Standard Chartered Plc. "Central bank purchases are not driven by price but by asset allocation."
Losing Steam
Gold may "lose steam quickly" if the market is disappointed by a lack of action to stimulate economies, Barclays Plc said in an e-mailed report today. "For gold to extend its gains, it needs to continue to draw wider investor support in light of the fragile physical market," analysts including Suki Cooper said in the report.
Gold imports by India, the biggest buyer, may decline by 250 tons to 350 tons this year as record prices in rupees cut into demand, East said. Consumption rose to a record 963.1 tons last year, driving bullion imports to the highest ever at 958 tons, according to the gold council.
"The Indian currency has weakened and could weaken further, so demand may not come in," East said. The Indian rupee declined to a record of 57.3275 per dollar on June 22, making imports costlier.
Bullion for October delivery gained as much as 0.5 percent to an all-time high of 31,091 rupees ($559) per 10 grams on the Multi Commodity Exchange of India Ltd. today. Prices have climbed 13 percent this year.
GFMS is owned by Thomson Reuters Corp. and Bloomberg competes with Thomson Reuters in selling financial and legal information and trading systems.