NEW YORK (Commodity Online) The World Gold Council has welcomed the Central Bank of Sri Lanka to diversify its reserves by buying gold. The move comes hot on the tail of the Reserve Bank of India's purchase of 200 tonnes of gold from the IMF on Monday and the announcement in April of this year by the China's State Administration of Foreign Exchange (SAFE) that the country's gold reserves had risen from 600 tonnes in 2003 to 1,054 tonnes.

Aram Shishmanian, Chief Executive Officer, World Gold Council, said:"Over the past year central banks, which have been net sellers of gold are now a new and increasingly important source of demand. This latest announcement demonstrates that many central banks are reassessing their reserve asset management policies, both in traditional "over weighted" countries, as well as the key Asian central banks.

"As the dollar continues to weaken and central bankers around the world realise the continuing importance of gold in providing economic stability, the confidence that an allocation to gold increases the risk-weighted returns of their reserve asset portfolios will increase. We believe more central banks in Asia and beyond will now announce increased allocations to gold."

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On Monday the International Monetary Fund announced that it had completed the sale of 200 tonnes of gold to the Reserve Bank of India. This amount represents almost half of the total sales volume of 403.3 tonnes approved by the IMF in September 2009.The transaction is an important step in the IMF's limited gold sales program, which is designed to help put the Fund's finances on a sound long-term footing and enable it to step up concessional lending to the world's poorest countries.