Turkey’s gold sales deepen bullion slump

{"text":[[{"start":9.9,"text":"Turkey has sold or loaned out $20bn of gold since the outbreak of the Iran war in a flurry of bullion disposals that contributed to the biggest monthly price drop for the metal since 2008."}],[{"start":25.55,"text":"The Central Bank of the Republic of Turkey sold 52 tonnes of gold between February 27 and March 27, according to analysis by consultancy Metals Focus based on official data, bringing Turkey’s net central bank holdings to 440 tonnes, their lowest level in more than two years."}],[{"start":47.78,"text":"The central bank also arranged about 79 tonnes of gold swaps — which involve leasing out gold bars to generate income and add to downward pressure on bullion prices by increasing the supply available to markets — during the period, as it battled to support the value of the lira."}],[{"start":69.36,"text":"The combined sales and swaps are worth nearly $20bn at current prices, according to FT calculations."}],[{"start":79.05,"text":"The global energy shock and widening war in the Middle East have prompted a growing number of countries, including Russia and Poland, to consider selling gold to bolster their currencies or improve their fiscal positions."}],[{"start":95.09,"text":"The CBRT was also among global central banks selling US Treasuries in a bid to support their currencies."}],[{"start":103.84,"text":"While central banks were a big driver for the multiyear bullion rally that propelled gold prices to a record high of more than $5,500 a troy ounce in January, a recent shift in their behaviour has pulled them down, analysts say. Last month prices fell by 11.5 per cent, bullion’s worst month in 18 years."}],[{"start":127.87,"text":"“Central banks’ sales are the dominant driver of the $1,000 price fall over the past few weeks,” said Nicky Shiels, analyst at refiner MKS Pamp. “The market has always assumed that central banks have been the backstop . . . But the recent data flows and official statements are sort of refuting that.”"}],[{"start":null,"text":"

"}],[{"start":149.71,"text":"The pace of Turkey’s gold sales accelerated towards the end of March, with 31 tonnes sold in the week ending March 27, the Metals Focus figures show."}],[{"start":163.01000000000002,"text":"“Turkey’s central bank has been holding 60 to 70 per cent of its reserves in gold. So it had to sell or swap some of that to raise needed dollar liquidity,” said Uğur Gürses, a Turkish economic commentator who once worked in the bank’s gold reserve management department."}],[{"start":181.50000000000003,"text":"“If 50 tonnes enters the gold market, that can have a huge effect on prices,” Gürses said, adding that he believed the CBRT now had sufficient liquidity and no immediate need to sell more gold."}],[{"start":196.89000000000004,"text":"The gold sales underscore Turkey’s determination to prop up the lira, because currency stability is a central plank in the country’s more than two-year-long campaign to curb inflation, which is running at 31 per cent."}],[{"start":211.28000000000003,"text":"Turkey’s net international reserves have fallen by almost half to $46bn since the Iran war began, according to calculations based on official data by Bürümcekçi Research and Consulting."}],[{"start":224.92000000000002,"text":"The sales also exemplify a broader shift in global central banks’ management of gold reserves."}],[{"start":232.26000000000002,"text":"Last year, central banks’ net gold purchases were about 860 tonnes, a decline of 20 per cent from the previous year, according to data from the World Gold Council, an industry body. "}],[{"start":246.00000000000003,"text":"This year, besides Turkey, known sellers include Russia, which disposed of 15 tonnes in January and February. Meanwhile, Poland’s central bank chief recently proposed selling bullion to raise funds for defence, although the government has opposed the plan. "}],[{"start":null,"text":""}],[{"start":264.08000000000004,"text":"Market participants say further sales this year could come from oil-importing countries hit by the energy crisis, such as India, or from Central Asian nations with significant gold reserves."}],[{"start":276.72,"text":"Gold’s sharp decline last month, which belies its traditional status as a safe haven and inflation hedge, also reflects four weeks of outflows from gold exchange traded funds since the war began as some investors rushed to take profits on winning trades as the conflict in the Middle East erupted. The metal has fallen back to about $4,650 a troy ounce. "}],[{"start":303.1,"text":"A growing number of central banks are also choosing to repatriate their gold, including France, which last week said it had finished a years-long repatriation programme and no longer held any in the US. "}],[{"start":316.34000000000003,"text":"Not all central banks are selling. The People’s Bank of China bought 160,000 troy ounces in March, its biggest reported purchase in more than a year, according to data released on Tuesday. "}],[{"start":329.04,"text":"Shaokai Fan, head of Asia Pacific at the World Gold Council, said China’s accelerated buying could reflect a desire to take advantage of lower prices. "}],[{"start":339.88,"text":"“We are seeing central banks take both sides in this movement of the gold price right now,” Fan said. “The interest in gold among central banks has increased in the last few months — but it cuts both ways.” "}],[{"start":353.40999999999997,"text":"Additional reporting by Cheng Leng and Raphael Minder"}],[{"start":367.38999999999993,"text":""}]],"url":"https://audio.ftcn.net.cn/album/a_1775717914_7298.mp3"}