South Korea announced on Tuesday that they have bought 25 tonnes of gold to decrease dependence on foreign exchange reserves. It has also been reported that emerging economies are looking to the bullion safe haven rather than the orthodox currency reserves approach.
It seems like Asian countries are looking for more and more gold to rely on, South Korea having the world’s seventh largest foreign exchange reserves has purchased an enormous amount of gold, they bought around 25 tonnes of gold.
The Bank of Korea announced on Tuesday that the purchased gold is worth $1.24 billion. The move is directed to decrease dependence of assets like United States dollar and other currency in the reserves.
The developing economies have been looking to buy gold in the recent years as they seek better options other than US dollar. Countries like Mexico, India and Russia have also bought reserves of gold and Thailand also announced a purchase of 17.7 tonnes of gold last month.
After the news today, the prices of gold have increased by 0.6 percent to $1,629.09 per troy ounce. After the agreement on raising the debt ceiling in the US, prices of gold came down a bit but Tuesday witnessed another rally in the bullion.
After the recent debt crisis worries in the United States, the arguments have sparked about the risk with US Treasuries, big holders like Japan and China are getting increasingly worried about the situation.
World Gold Council also says that governments all around the world hold an average of 10 percent in gold out of their foreign exchange reserves but developed nation like US, France and Germany have it value up to 50 percent.
However, South Korea cleared that the buying has nothing to do with hampering the value of US dollar. The officials said that it would be very wrong to say that they want to hurt dollar by the move as the country’s reserves also consist of other currencies like euros.
After the purchase of this heavy amount of gold will surely increase the price of gold in future as more countries will look to do the same.
