India May Buy more gold from IMF

http://tinyurl.com/BuyGoldNow
Nov. 25 (Bloomberg) -- Gold climbed to a record in London and New York on a further drop by the dollar and on a report that India may buy more bullion for its central-bank reserves.

Gold has rallied 11 percent since India said on Nov. 3 it bought 200 metric tons of gold from the International Monetary Fund. The country, the worlds largest gold consumer, is open to additional purchases from the IMF, the Financial Chronicle newspaper reported. The U.S. Dollar Index fell for a third day, sliding to the lowest level in more than 15 months.

Central-bank buying has been one of the main factors of this recent rally, Peter Fertig, owner of Quantitative Commodity Research Ltd. in Hainburg, Germany, said today by phone. The weaker dollar is driving commodities higher.

Gold for immediate delivery added as much as $13.05, or 1.1 percent, to $1,182.45 an ounce and traded at $1,179.85 by 12:13 p.m. in London. Prices may advance to $1,200 next week, according to Fertig.

Bullion futures for February delivery on the New York Mercantile Exchanges Comex division climbed 1.2 percent to $1,181.10 an ounce. They earlier reached $1,183.90. Up for a ninth day, futures are set for the longest stretch of gains since August 1982.

Record Fixing

The metal rose to a record $1,176.50 an ounce in the morning fixing in London from $1,163.25 at yesterdays afternoon fixing. Some mining companies use fixings to sell production. Spot prices are up 34 percent this year.

Reserve Bank of India Governor Duvvuri Subbarao declined to comment on the report. A further purchase would make the countrys stockpile the worlds eighth-largest, overtaking the Netherlands and Russia, according to figures from the producer- funded World Gold Council.

Actions from central banks are very important at the moment, said Eugen Weinberg, an analyst at Commerzbank AG. The purchase from India was like a seal of prices above $1,000 an ounce. Also, other central banks are buying gold.

The central banks of Russia and Sri Lanka have acquired gold, prompting analysts at Bank of America Merrill Lynch, Societe Generale and Barclays Capital to forecast more such purchases. Governments are the biggest bullion holders. Mauritius bought 2 tons of gold from the IMF last month for $71.7 million after Indias $6.7 billion purchase.

First Come, First Served

The IMF, which set out two months ago to dispose of one- eighth of its gold reserves, still has more than 200 tons to sell. It will do so on a first-come, first-served basis, Andrew Tweedie, head of the funds finance department, said in a Nov. 20 interview.

The additional stimulus for gold is the increased demand emerging from central banks, who are now keen to diversify away from the falling value of dollar reserves, said Mark Pervan, a commodity strategist with ANZ Banking Group Ltd. in Sydney.

Bullion typically moves inversely to the U.S. currency. The dollar index, a six-currency gauge of the greenbacks value, slid as much as 0.9 percent today after Federal Reserve officials refrained from voicing concern over this years 8.3 percent decline.

Assets held by the SPDR Gold Trust, the biggest exchange- traded fund backed by bullion, expanded for a second day yesterday to 1,122.37 tons, the most since June 29. The funds holdings reached a record 1,134 tons on June 1. Gold held in ETF Securities Ltd.s exchange-traded products fell 0.5 percent to 7.936 million ounces yesterday, its Web site showed.

Investment Demand

Speculators betting on higher prices have a very good argument on their side, Weinberg said in a Bloomberg Television interview. Its the weak dollar, the possibility of longer-term inflation, and also actions from central banks. Its definitely investment demand that is pushing prices higher.

Among other precious metals for immediate delivery in London, silver added 1 percent to $18.69 an ounce. Platinum gained 1.8 percent to $1,474.50 an ounce, while palladium climbed 1.4 percent to $374.50 an ounce.

ETF Securities silver holdings rose 0.7 percent to a record 22.861 million ounces yesterday, its Web site showed. Platinum assets added 164 ounces to a record 426,639 ounces, while palladium holdings climbed 1.4 percent to an all-time high of 624,859 ounces.