The Bank of Korea, South Korea's central bank, for the second time this year, raised its holdings of gold in November as part of measures to diversify its portfolio of foreign exchange reserves. In a statement on Friday, the Bank of Korea said it purchase
The Bank of Korea, South Korea's central bank, for the second time this year, raised its holdings of gold in November as part of measures to diversify its portfolio of foreign exchange reserves. In a statement on Friday, the Bank of Korea said it purchased 15 tonnes of gold for $850 million in November, four months after it bought an initial 25 tonnes for $1.24 billion between June and July, its first over a span of 13 years. Reuters

Gold prices have recouped the losses as the failure of the U.S. congressional super committee to reach a deal on reducing the budget deficit and the continuing eurozone crisis brought back the bargain hunters.

Gold, which is currently trading around $1,700, is normally considered as a safe-haven for investment when stock markets perform badly. Higher crude oil prices and a weak dollar would also boost gold prices.

Last week, the price of the yellow metal gold was range bound in the low $1700s and fell 3 percent as physical buyers continued to keep their distance, waiting for further downside, with orders slowly starting to build below the psychological $1700 mark. On Nov.21, the prices even slumped to a 4-week low.

Gold futures rose 0.16 percent, or $2.8, to $1,705.20 an ounce. Silver futures, however, declined 2.05 percent, or 68 cents, to $32.36.

Meanwhile, the IMF has beefed up its lending instruments and launched a six-month liquidity line, throwing help to countries with solid policies that may be at risk from the euro zone debt crisis.

Governments, Institutions and Individuals are still buying gold for the long term. Longer-term investor interest remains stable with physically backed Gold ETPs edging up by a ton to 2185 tons and taking flows for the month to date into neutral territory.

In addition, investment demand in gold has picked up despite the recent price declines in the futures market. UBS said, in the week to Nov. 18, gold ETF holdings rose by 0.90 moz to an all time high of 77.60 moz. Inflows worth 785.20 koz were seen into the GLD fund and iShares contract was up by 78.03 koz. Moreover, Source fund rose by 25.91 koz and ETFS (NYSE) fund gained 9.87 koz. The month-to-date change in total gold ETF holdings stands at 1.94 moz. The rolling monthly change rose to 2.76 moz from 2.01 moz the previous week.

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