Seoul: The Bank of Korea, which has the world’s seventh-biggest foreign-exchange reserves, boosted gold holdings for the third time since June last year, joining central banks from Russia to Kazakhstan in buying bullion to diversify assets.

The bank bought 16 metric tonnes last month, increasing reserves to 70.4 tonnes, according to Lee Jung, head of the investment strategy team at the bank’s Reserve Investment Division. Holdings increased by $810 million to $2.98 billion, or the equivalent of 0.9 percent of total reserves, the bank said in a statement today.

Central banks are expanding stockpiles after gold rallied for 11 consecutive years as investors sought a hedge against everything from rising inflation to Europe’s debt crisis to slumping equities. Their purchases this year will probably exceed the 456 tonnes added in 2011, the World Gold Council estimates. Central banks and the International Monetary Fund are the largest bullion owners with 29,500 tonnes at the end of last year, or 17 percent of all mined metal, council data show.

“Central bank buying of gold is one of the pillars supporting prices and it will continue,” said Nick Trevethan, senior commodities strategist at Australia & New Zealand Banking Group Ltd. “Asian central banks have a way to go in terms of boosting their gold holdings. We see scope for further accumulation.”

Gold for immediate delivery gained 2.5 percent this year and traded at $1,602.05 an ounce at 3:13pm in Seoul. Prices averaged $1,593.68 last month and reached a record $1,921.15 in September.

The Bank of Korea bought 25 tonnes over a one-month period from June to July last year, the first purchases in more than a decade, and added a further 15 tonnes in November.

Kazakhstan plans to raise the amount of gold it holds as part of its international reserves to 15 percent from 12 percent. The country’s gold reserves increased 1.6 tonnes in June to 101.6 tonnes, according to data on the IMF website.

“We’ve already signed contracts for 22 tonnes,” Bisengaly Tadzhiyakov, deputy chairman of the central bank, said June 7. “The bank is ready to buy when suppliers are ready to sell.”

In Russia, Bank Rossii increased gold holdings to 29.5 million ounces (917.5 tonnes) in June, from 29.3 million ounces at the end of May, the central bank said in a statement on its website July 20. That would be the most since at least 1993, when IMF data tracking Russian figures begins.

Still, UBS AG estimates that central bank net purchases of gold were 116.2 tonnes for the first half of this year, about 38 percent lower than the same period last year, analyst Edel Tully said in a July 26 report, citing IMF data.