Share

Gold climbs to record as India's central bank buys IMF bullion

|
Business

Gold jumped to a record after India's central bank bought 200 metric tons of the metal from the International Monetary Fund, heightening speculation that there may be more official purchases.

Gold futures for December delivery rose to a record $1,088.50 an ounce at about 2:22 p.m. in after-hours trading on the New York Mercantile Exchange's Comex unit. Earlier, the most active contract settled at $1,084.90, up $30.90, or 2.9 percent. It was the biggest gain since March 19.

"This will encourage other countries and other investors, especially Indians, who are big buyers anyway, to jump into the market," said Leonard Kaplan, the president of Prospector Asset Management in Evanston, Ill.

The Reserve Bank of India paid $6.7 billion for the bullion, which it bought from Oct. 19 to Oct. 30. It was "the biggest single central bank purchase that we know about for at least 30 years in such a short period," said Timothy Green, author of "The Ages of Gold." "The only comparable event was the U.S.'s steady purchases in the 1930s and 1940s."

Central banks, the biggest holders of gold, may diversify out of the dollar and buy bullion as ballooning U.S. debt and low interest rates weaken the currency.

"It is but a matter of time until China and the IMF announce much of the same," said Dennis Gartman, an economist and the editor of the Gartman Letter in Suffolk, Va. China, now the sixth-largest holder of gold, has increased its gold reserves by 76 percent since 2003, to 1,054 tons, the official Xinhua News Agency reported in April.

View article comments Leave a comment