South Korea spent more than US$1 billion in its first gold purchase in more than a decade, as uncertainty about global growth and sovereign debt push central banks around the world to diversify foreign reserves.
A brittle global economic recovery and precarious debt conditions in the US and Europe have boosted the safe-haven appeal of gold, lifting the bullion to a record high on Friday.
The Bank of Korea said in a statement yesterday it bought 25 tonnes of gold over the past two months, raising its gold holdings to 39.4 tonnes, news that helped lift spot gold by about US$6 from late Monday.
Photo: Reuters
Reserve currencies, like the US dollar and euro, “have been losing their clout since the recent global financial crisis partly due to abnormal monetary policy adopted in many countries and fiscal deficit problems,” said a central bank official who declined to be named because he was not authorized to speak to the media.
Data on 27 major economies from the Bank for International Settlements shows the US dollar’s inflation-adjusted real effective value has dropped by 10 percent in the past two years and the euro has lost 6 percent, reflecting the sharp increase in the amount of each currency in circulation.
South Korea’s gold holdings remain far smaller than that of other Asian central banks, with China, which ranks sixth globally, the biggest with 1,054.1 tonnes by the end of May, according to World Gold Council data.
Japan, No. 9 globally, has 765.2 tonnes of gold, or 3.3 percent of its total reserves, and 11th-ranked India has 557.7 tonnes, or 8.7 percent.
With prices hovering near historic highs, the central bank of Asia’s fourth-largest economy said gold looked less lucrative as an investment, but it was the right time to buy the precious metal because its foreign reserves had risen above US$300 billion.
The news helped boost gold prices, with spot up 0.4 percent at US$1,623.94 an ounce at 5:28am. Gold hit a record high of US$1,632.30 on Friday.
“Any news about central banks buying gold reassures consumers and other major players who are already looking at gold as an investment,” said Jeffrey Pritchard, an analyst at California-based commodities futures and options brokerage Altavest Worldwide Trading.
The increased gold holding would put South Korea in 45th position in the World Gold Council’s list of central banks holding gold, up from 56th previously, the Bank of Korea said.
The US has the biggest gold holding in its reserves, at 8,133.5 tonnes, or 74.7 percent of total reserves, according to the council’s report last month. Germany is a distant second with 3,401 tonnes, or 71.7 percent of its total reserves.
Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) yesterday said that its investment plan in Arizona is going according to schedule, following a local media report claiming that the company is planning to break ground on its third wafer fab in the US in June. In a statement, TSMC said it does not comment on market speculation, but that its investments in Arizona are proceeding well. TSMC is investing more than US$65 billion in Arizona to build three advanced wafer fabs. The first one has started production using the 4-nanometer (nm) process, while the second one would start mass production using the
A TAIWAN DEAL: TSMC is in early talks to fully operate Intel’s US semiconductor factories in a deal first raised by Trump officials, but Intel’s interest is uncertain Broadcom Inc has had informal talks with its advisers about making a bid for Intel Corp’s chip-design and marketing business, the Wall Street Journal reported, citing people familiar with the matter. Nothing has been submitted to Intel and Broadcom could decide not to pursue a deal, according to the Journal. Bloomberg News earlier reported that Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) is in early talks for a controlling stake in Intel’s factories at the request of officials at US President Donald Trump’s administration, as the president looks to boost US manufacturing and maintain the country’s leadership in critical technologies. Trump officials raised the
‘SILVER LINING’: Although the news caused TSMC to fall on the local market, an analyst said that as tariffs are not set to go into effect until April, there is still time for negotiations US President Donald Trump on Tuesday said that he would likely impose tariffs on semiconductor, automobile and pharmaceutical imports of about 25 percent, with an announcement coming as soon as April 2 in a move that would represent a dramatic widening of the US leader’s trade war. “I probably will tell you that on April 2, but it’ll be in the neighborhood of 25 percent,” Trump told reporters at his Mar-a-Lago club when asked about his plan for auto tariffs. Asked about similar levies on pharmaceutical drugs and semiconductors, the president said that “it’ll be 25 percent and higher, and it’ll
CHIP BOOM: Revenue for the semiconductor industry is set to reach US$1 trillion by 2032, opening up opportunities for the chip pacakging and testing company, it said ASE Technology Holding Co (日月光投控), the world’s largest provider of outsourced semiconductor assembly and test (OSAT) services, yesterday launched a new advanced manufacturing facility in Penang, Malaysia, aiming to meet growing demand for emerging technologies such as generative artificial intelligence (AI) applications. The US$300 million facility is a critical step in expanding ASE’s global footprint, offering an alternative for customers from the US, Europe, Japan, South Korea and China to assemble and test chips outside of Taiwan amid efforts to diversify supply chains. The plant, the company’s fifth in Malaysia, is part of a strategic expansion plan that would more than triple
RSS