Brazil gold reserves hit 11-year high Brazil has boosted its gold holdings for the second straight month, and to the highest level in 11 years, as Latin America's biggest economy looks to diversify its vast international reserves. Data from the International Monetary Fund on Wednesday showed that Brazil raised its bullion holdings by 17.2 tonnes in October to 52.5 tonnes, the highest level since January 2001. The move comes on the back of Brazil's 1.7 tonne increase in September, the country's first significant gold purchase in a decade. Brazil's aggressive efforts to weaken its currency by buying dollars - about $132bn since the beginning of 2008 - have left the country with the sixth biggest international reserves in the world, about 80 per cent of which is denominated in the US currency. However, recent turmoil in currency markets and concerns over the global financial crisis had given Brazil's authorities even more reason to diversify their holdings, said Silvio Campos Neto, an economist at the Tendências consultancy in São Paulo. "The dollar has its problems because of monetary easing policies and fiscal uncertainties that will also exert a certain pressure on the currency, so it's natural the country is on the lookout for other types of assets," he said. Brazil is the latest emerging economy to buy gold, as concerns about quantitative easing and competitive devaluation by the world's biggest central banks drive reserve managers to diversify their holdings. As a group, central banks are set to buy almost 500 tonnes of gold this year, the most in more than four decades. Central banks in Latin America have recently joined those in Asia and the Middle East in adding to their gold reserves: in addition to Brazil, others including Mexico, Colombia, Paraguay and Argentina have recently bought bullion. The buying is helping to prop up prices, in spite of weak demand in China and India, gold's main physical markets, and uncertainty among investors. Edel Tully, precious metals strategist at UBS, said that Brazil's buying in October had been "one of the key factors that gave prices a reasonable floor last month." Gold last month fell to a low of $1,672 a troy ounce, but on Wednesday was trading at $1,728. Although Brazil's central bank declined to comment on the reason behind its recent return to gold purchases, it has frequently stated its intention to diversify assets and reduce its exposure to currency risk. In December last year, 83.5 per cent of the central bank's $352bn reserves was held in government bonds, 15.6 per cent was in other bonds and bank deposits while only 0.8 per cent of reserves was held in other asset classes such as gold. In its international reserves report in June, the central bank said the recent surge in reserves had allowed the country to hedge its external liabilities, allowing it to now "seek a greater diversification of international reserves." Recent weakness in Brazil's real, which was trading around a three-year low of R$2.09 against the dollar on Wednesday, has also given the central bank more room to halt currency interventions and buy other assets, said Mr Campos Neto.