Gold surges to record high

Gold has surged to a record high price of over $1000 an ounce, a day after the International Monterary Fund allowed a massive sell off to India.

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Prices in London hit 1,085.07 dollars per troy ounce and New York prices reached $1,084.70, breaking records set last month.

The latest surge came a day after the International Monetary Fund announced it sold 200 tonnes of gold to India’s central bank over a two-week period last month for a total of $6.7 billion to bolster its finances.

The IMF said the transaction, which was in the process of being settled, involved daily sales that were phased over a two-week period during October 19-30.

A senior IMF official said that the IMF was “lucky” in selling the 200 tonnes to India for roughly 1,045 dollars an ounce. The deal represented around half the IMF’s planned sale of its gold reserves.

Bart Melek at BMO Capital Markets said the big sale to India gives credence to the theory “that there are official buyers waiting in the wings for large amounts of available gold.

“The question now is, who buys the rest of the IMF gold?” Melek said in a note to clients.

“We suspect it may be China, other Asian countries, Russia or even India again, as they hold relatively little gold relative to their very large foreign exchange reserves, and may want to diversify away from US dollars.”

Gold and other commodity prices have resumed their surge 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.

Gold also gets support from fears about higher inflation because the metal is widely regarded by investors as a safe store of value.

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