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S. Korea's ranking rises to 34th in gold reserves

South Korea ranked 34th in gold holdings last month, marking its highest ranking ever, as its central bank has purchased the precious metal to diversify its foreign exchange reserves, data showed Monday.

South Korea's gold holdings reached 104.4 tons valued at $4.79 billion as of end-June, accounting for 1.5 percent of the country's total FX reserves of $326.44 billion, according to the Bank of Korea (BOK).

The BOK bought 20 tons of gold in February, following its previous four rounds of purchases since July 2011. The BOK bought gold for the first time in 13 years in 2011 in a bid to diversify its portfolio of the FX reserves.

Accordingly, Korea's ranking in gold holdings rose to 34th as of end-June, up from 36th at the end of 2012, according to the World Gold Council, an international body that offers key information about gold.

The country was ranked 56th in July 2011.

The BOK has intensified its move to diversify its portfolio of the foreign reserves by cutting its portion of dollar denominated assets and purchasing gold.

The United States was the world's largest gold holder with 8,133.5 tons, followed by Germany with 3,391.3 tons and the International Monetary Fund with 2,814 tons, the data showed.

The prolonged global economic recovery and the U.S. Federal Reserve's quantitative easing were the main drivers for a bull run in gold prices in recent years as the dollar remained weaker against major currencies.

But gold prices are on a downward trend amid signs of economic improvement and the Fed's stimulus tapering speculation. Gold prices have declined more than 30 percent since October of last year.

The falling trend of gold prices are spawning some concerns that the BOK might have posted huge valuation losses, raising questions about its timing to invest in gold.

The BOK, however, has dismissed such concerns, saying that its increased exposure to the bullion has been made from a long-term perspective and it is not important to gauge profits or losses stemming from the short-term volatility in gold prices. (Yonhap News)



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