London/Singapore: Gold traded within 0.5% of a record after India’s central bank bought 200 tonnes of the metal from the International Monetary Fund (IMF), heightening speculation of more central bank purchases.
It’s positive in many ways because it suggests central banks, rather than being net sellers, are now looking at becoming net buyers, said James Moore, an analyst at TheBullionDesk.com in London. It’s a surprise because everybody was talking about China being the buyer.
December-delivery gold climbed as much as $12.90, or 1.2%, to $1,066.90 an ounce on the New York Mercantile Exchange’s Comex division. The record was $1,072 an ounce on 14 October. Gold for immediate delivery in London slipped 0.1% to $1,058.02 an ounce in early trade, compared with a record of $1,070.80. Prices rose to an all-time high in gold traded in rupees.
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India’s purchase buoyed gold as industrial metals slumped on concern that governments will remove economic-stimulus measures, crimping demand for raw materials. Copper led declines on the London Metal Exchange, falling 2.3% to $6,405 a tonne.
On Tuesday, Mint reported that RBI will buy 200 tonnes of gold from IMF.
India held 350 tonnes of gold at the end of 2008, making it the 12th largest government owner, according to the 2009 Gold Survey by GFMS Ltd. The extra 200 tonnes propels India past Russia into ninth place, according to GFMS figures. “You usually associate Indian consumers buying gold more than you do the central bank in India,” said Mario Innecco, a broker at MF Global Ltd in London.
IMF’s executive board on 18 September approved sales of 403.3 tonnes, pledging to avoid disrupting the market. The board last year endorsed the sale, about one-eighth of the organization’s total stockpile, as part of a plan to shore up its finances. China increased its gold reserves by 76% since 2003 to 1,054 tonnes, the official Xinhua News had reported in April.
“This is positive for the gold market as bilateral sales, which avoid the open spot market, will avoid adding to marginal physical supply,” said David Barclay, a commodity strategist with Standard Chartered Bank in Hong Kong.
China, Russia and Brazil may be interested in the rest of the IMF gold, Moore said.