Gold hits new record above $1,095

Published: November 05, 2009

LONDON (AFP) - The price of gold leapt to a record peak of 1,095.40 dollars an ounce in trading here on Wednesday in the wake of the International Monetary Fund’s massive sale of the precious metal to India.
Gold had already reached a record high of 1,087.80 dollars on Tuesday as the IMF said it had sold 200 tonnes of gold to India’s central bank over a two-week period last month for 6.7 billion dollars to bolster its finances.
After spiking to a new high Wednesday, gold pulled back to 1,091.75 dollars in London.
“Gold is still benefiting from news that, at the end of October, India bought 200 tonnes of gold from the IMF at market prices,” said Commerzbank analysts.
“This transaction is an indication that, despite the prevailing high price level, central banks from emerging economies are still willing to accumulate gold to diversify their currency reserves,” they added in a note to clients.
Gold and other commodity prices have surged in recent months amid a move away from the dollar, which has been slumping. The move accelerated last month on a report that Gulf states may stop using the greenback for oil trading.
The metal is also winning support from fears over a possible spike in inflation, as gold is widely regarded by investors as a safe store of value.
Bart Melek at BMO Capital Markets said the big sale of gold to India gives credence to the theory “that there are official buyers waiting in the wings for large amounts of available gold.

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