Former Soviet Kazakhstan is one of a number of countries, including Russia, Mexico, Colombia and South Korea, that have built up their official gold holdings in recent years. Most buying has been seen from Asian and emerging market central banks, which typically hold a smaller proportion of their currency reserves in bullion than developed economies.
Official sector gold purchases rose to their highest since the mid-1960s last year, metals consultancy GFMS said, largely as developing countries diversified their foreign exchange holdings in response to the sovereign debt crisis.Kazakhstan's central bank, with net gold and foreign currency reserves of $33.8 billion at the end of May, has said it will cut its euro holdings to 25 percent from 30 percent. It has not made clear with what the euros will be replaced.
Central bank governor Grigory Marchenko, speaking to reporters in the commercial capital Almaty, said the bank had amassed more than 100 tonnes of gold in its reserves, having bought more than 20 tonnes last year and this. The central bank said in an explanatory note to parliament that, by purchasing gold from the domestic market, it would stimulate domestic producers to raise output and increase the degree of refining.
"The development of the domestic market will allow for the diversification of pension-fund assets and the savings of the population," the central bank said. "It will also reduce the exposure of the national economy to the dollar." Tadzhiyakov said Kazakhstan had plans to build a third gold refinery in the capital, Astana, to cope with increased demand for processing. Only one refinery in Kazakhstan, operated by Glencore-owned miner Kazzinc in the east of the country, refines ingot to international standards. Copper miner Kazakhmys refines gold at another plant to meet domestic standards. Kazakhstan's refined gold output totalled 16.6 tonnes last year, data from the State Statistics Agency show.