Asia central banks wary of rushing into gold

By Tony Munroe and Eadie Chen

NEW DELHI/BEIJING (Reuters) - Asian central banks appear to be in little rush to follow India's lead and make big purchases of gold given its high market price and the availability of cheaper domestically-produced gold.

The relative illiquidity of gold, the small size of the gold market and difficulty buying in large quantities may also deter central banks from emulating the Reserve Bank of India, which last month bought 200 tonnes of gold from the International Monetary Fund at an average price of $1,045 an ounce.

India's deal, revealed this week, surprised markets, sent gold to record highs, and prompted speculation that other central banks would buy gold to diversify reserves in the face of a declining dollar, with China cited as an obvious buyer given its vast dollar holdings.

The IMF is selling another 200 tonnes of gold.

Central banks in Japan, South Korea and Australia have shown little recent inclination to buy gold overseas.

"We have no plans to buy gold ... We don't have a lot but we have enough," Bank of Thailand Governor Tarisa Watanagase told Reuters in an interview on Thursday.

"Gold is a secure asset but historical statistics show that, excluding its speculative side, it yields a low, long-term rate of returns from collateral fees," she said.

Even at $1,000 an ounce, all the gold bullion in the world is worth no more $1 trillion, or less than half China's $2.27 trillion in currency reserves, said Zhang Yuyan, who heads the Institute of World Economics and Politics at the Chinese Academy of Social Sciences, the government's top think-tank.