Gold rises on bank buying counter decline in ETPs

Gold today rose, extending gains after the best week in a month, as buying by central banks and signs of increased physical demand countered continued outflows in investor holdings.

Gold gained 0.6 percent to 1,395.38 dollar an ounce. Prices advanced 2 per cent last week, the best showing since the five days to April 26, on speculation the US Federal Reserve will maintain asset purchases. Silver also climbed 1.3 percent to 22.69 dollar an ounce.

Russia and Kazakhstan expanded gold reserves for the seventh straight month in April, when prices tumbled into a bear market, International Monetary Fund data show.

The volume for the Shanghai Gold Exchange's benchmark cash contract jumped to a three-week high on May 24, while assets in gold-backed exchange- traded products dropped for a 15th week last week.

Gold is 17 percent lower this year as some investors lost faith in the metal as a store of value, reduced holdings in ETPs and shifted into riskier assets including equities.

IMF data showed Turkey, Belarus, Azerbaijan and Greece joined Russia and Kazakhstan in adding gold to reserves last month. Mexico and Canada reduced holdings, the data showed.