Iraq boosts gold reserves for first time in years

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Iraq made its first major move in years to boost its gold reserves in recent months, joining central banks from emerging market economies such as Brazil and Russia in diversifying its foreign reserves.

Central bank purchases have been one of the biggest drivers of gold's rally since 2010 - a year which saw central banks turning net buyers of the precious metal for the first time in two decades amid growing doubts about the stability of the dollar as the world's top reserve currency.

Over the course of three months between August and October this year, Iraq's gold holdings quadrupled to 31.07 tonnes, the International Monetary Fund's monthly statistics report showed on Thursday.

In the first change in its reserve in years, the country added some 23.9 tonnes in August, bringing the total to 29.7 tonnes. That was followed by a 2.3-tonne rise in September to 32.09 tonnes and then by a cut of 1.02 tonnes in October to 31.07 tonnes. There was no data for November.

"It was interesting that Iraq bought gold," a Sydney-based trader said on Friday.

"Gold bulls will cheer the news as more central bank buying will support gold prices in the future, but the market currently is a little distracted by other things, namely the US 'fiscal cliff' talks."

Spot gold prices are set for their twelfth straight year of gains in 2012. Over this period gold gained the most, around 30 percent, in 2007 and 2010.

But right now gold is facing pressure from end-of-the-year fund liquidation and the uncertainty hanging over U.S. talks to avert the "fiscal cliff" of tax hikes and spending cuts that would kick in early next year and threatens to tip the economy back into recession.

Among other central banks, Brazil increased its gold holdings for a third straight month in November, raising its reserves by almost a third to 67.199 tonnes.

Russia, added 2.86 tonnes to raise its gold reserves to 937.82 tonnes, the eighth highest gold holdings in the world.

The United States, the top gold holder, has more than 8,100 tonnes of the precious metal in its reserves, data from the World Gold Council (WGC) showed.

South Korea's central bank bought 14 tonnes of gold in November, lifting the country's gold holdings to 84.4 tonnes.

Official sector's gold buying in the first three quarters of the year at 351.8 tonnes already exceeds the total for 2011, the WGC said.

But some countries trimmed their gold holdings, including Turkey, Sri Lanka, Mexico and Mongolia.

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