Gold hits new high on India buy
5 November 2009
The gold price jumped to a new record high of $1 095.65 on Wednesday following news that India had bought 200 tonnes of gold from the International Monetary Fund – the largest central bank purchase in at least 30 years.
The sale to India was nearly half the 403.3 tonnes of gold that the IMF has targeted for sale over the coming years.
Earlier this week, the IMF confirmed the sale to India's central bank, saying it had sold the precious metal over a two-week period last month for US$6.7-billion in a bid to strengthen its finances.
The Washington-based IMF currently holds 3 217 tonnes of gold, making it the third-largest official holder of the precious metal after the US and Germany.
India is the world's biggest consumer of gold. It imports between 700 and 800 tonnes of the metal every year. That represents about 20% of global demand.
By 12.57pm on Wednesday, gold was quoted at $1 093.50 an ounce, up $8.70 from its previous high of $1 084.80.
"While gold is vulnerable to long liquidation, the Reserve Bank of India purchase news yesterday could give rise to further diversification into gold in the coming sessions as investors shy away from the dollar and fiat currencies and turn towards physical/physically backed assets," said James Moore of BullionDesk.
"Gold looks poised to post fresh highs into the $1 080 to $1 100 area," Moore predicted.
Sapa
