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Mon 16 Apr 2007 03:06 PM

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Qatar gold reserves up

Central bank gold holdings rose more than fivefold during January and February.

Qatar central bank gold holdings rose more than fivefold during January and February, central bank data showed, even though gold prices only climbed 4.5% during the same period.

Gulf Arab oil and gas producer Qatar, which said last year it wanted to diversify its foreign exchange reserves away from the dollar, held 240 million riyals ($65.97 million) of gold on February 28th, compared with 44.3 million riyals at the end of December, the data on the central bank website showed.

The afternoon gold fix in London rose to $664.20 per troy ounce on February 28, from $635.70 on December 31st. The data imply Qatar bought 80,162 troy ounces of gold, or 2.49 tonnes, during the two-month period.

Like other Gulf Arab oil producers, Qatar pegs its currency to the dollar, which declined about 10% against the euro last year. That helped spur Qatari inflation to 11.83 percent last year, the highest rate on record.

Gold rose to a six-week high on Friday on a drop in the dollar against the euro.

A weaker dollar gives buyers more purchasing power in dollar-denominated gold, which is also often seen as a hedge against inflation.

Qatar's central bank said last April it was buying euros as part of its diversification programme.

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