Turkish central bank only buyer of local gold

Turkey’s central bank has been the only buyer of gold produced in the country since 2017 and that policy is unlikely to change, Bloomberg reported on Monday, citing a sector official.

The central bank has been the biggest buyer of gold bullion among global monetary authorities this year, adding 170 tonnes to its inventory, Bloomberg said.

Turkish production of gold is expected to increase 16 percent to 44 tonnes in 2020, with all of that amount set to be purchased by the Ankara-based bank, said Hasan Yücel, head of the Turkish Gold Miners’ Association. A spokesman for the central bank declined to comment on its purchasing strategy, Bloomberg said.

Turks are among the world’s leading buyers of gold, which they traditionally present as gifts at events such as weddings and circumcisions. Gold is also an important component of Turkey’s current account. The current account deficit has widened this year as imports outpaced exports, pressuring the lira. The currency fell to a record low this month.

The value of the central bank’s reserves of gold has surged this year, helped on by an increase in the price of the commodity, even as its foreign currency reserves slumped to a 15-year low, Bloomberg said.

Legislation approved in 2017 gave the central bank the first right of refusal for purchasing gold mined in Turkey at existing market prices.

The value of the central bank’s reserves of gold jumped to a record high in the week ending Aug. 7. It dropped 5 percent the following week, the biggest decline in five months, reflecting moves in global market prices, Bloomberg reported.

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