ISTANBUL: Turkey, one of the world’s biggest gold buyers, imported more of the precious metal in April than in any month since August 2008, Bourse Istanbul data showed, as a price drop to a two-year low led to a surge in demand.
Gold imports in April jumped to 45.49 tonnes, more than double the 18.26 tonnes from the previous month and compared with imports of 120.78 tonnes for 2012 as a whole.
Gold last month hit a two-year trough around $1,321 an ounce, partly due to market anxiety over news that Cyprus was considering selling gold reserves to finance part of its bailout.
The price has since partly recovered but is still down more than 12 per cent so far this year. On Thursday it rose more than 1 per cent after the European Central Bank cut its main interest rate for the first time in 10 months.
Turkey, which is not a major gold producer, was a net importer of gold, jewellery and precious metals in 2011 but swung to being a net exporter last year when it began shipping billions of dollars of the metal to Iran.
As Iran’s biggest natural gas customer, Turkey has been paying for energy imports with lira, because Western sanctions on Iran’s disputed nuclear programme prevent it from receiving dollars or euros. Iranians use those lira to buy gold in Turkey. Gold is big business in Turkey for cultural reasons and also because of bouts of high inflation over the past century. The metal is traditionally given as a gift at weddings and circumcision ceremonies, and demand for imports tends to surge during the summer months.
Meanwhile, Turkish consumer prices rose less than expected in April, data showed on Friday, strengthening expectations for further rate cuts and pushing bond yields to even deeper record lows.
The consumer price index rose 0.42 per cent month-on-month in April, below a Reuters poll forecast of a 0.65 per cent rise, for a year-on-year increase of 6.13 per cent, the Turkish Statistics Institute said. The producer price index fell 0.51 per cent on the month, for an annual rise of 1.70 per cent.
“When combined with the low commodity prices and falling producer prices, lower than expected consumer inflation might polish rate cut expectations for May,” said Burcu Unuvar, a senior economist at Is Investment.
Turkey’s two-year bond yield fell after the figures, dropping to 4.97 per cent compared with 4.99 per cent just before the announcement, already a record low. The lira eased slightly to 1.7951 to the dollar from 1.7940 beforehand.