LONDON (AFP) – Gold prices on Wednesday hit record highs nearing 1,183 dollars as a weak greenback and inflationary fears fuelled demand for the precious metal. Prices also won support from a report that India was mulling the purchase of more IMF gold reserves, they added.
The precious metal hit 1,182.95 dollars an ounce in afternoon trade on the London Bullion Market, after striking a series of historic peaks in recent days and weeks.
Gold is setting new highs because of “the (weak) dollar … (and) also rumors (in the) Financial Chronicle that India is ready to buy more IMF gold,” VTB Capital commodities analyst Andrey Kryuchenkov told AFP. “1,200 dollars is still in sight, being the next target.”
A struggling dollar makes the precious metal cheaper for buyers using other currencies, stimulating demand for the metal and in turn pushing up gold prices. Kryuchenkov added that gold futures were winning support also from a report in India’s Financial Chronicle newspaper that claimed the emerging nation was mulling the purchase of more IMF gold.
The price of gold has rocketed since the start of November when India’s central bank bought 200 tonnes of the metal from the International Monetary Fund.Fears about a future spike to inflation have also fuelled demand, with gold viewed as a “safe-haven” investment in times of economic uncertainty.”Gold prices continue to set fresh highs, buoyed by strong investor demand and a change in the official sector appetite for” the metal, said Barclays Capital analyst Suki Cooper.
The Reserve Bank of India (RBI) may well buy IMF’s remaining hoard of 201.3 tonnes on acceptable terms, which are now under negotiation, according to reports in India’s Financial Chronicle.
A government official said that the additional purchase would depend on the “successful pitching by RBI.” “RBI is an independent body, and the government does not interfere in its affairs. It will get the gold if its bid is successful and at the price it has offered.” said the official.
Spot gold is up to $1180.80 in early trading today, up from yesterday’s close of $1168.20.