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Nov-04-2009PRECIOUS METALS: Comex Dec. Gold Extends Record High(topic overview)
CONTENTS:
- LONDON — 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. (More...)
- The fact is that the RBI looked at $1,000-an-ounce gold and was still willing to buy an awful lot of gold at that elevated price. (More...)
- Gold's march to record levels is set to fire up trade in the gold exploration stocks, the most leveraged of plays to periods of bullish investor sentiment towards the metal. (More...)
- Despite Canada's status as a major producer and home to some of the world's largest gold-mining companies, gold accounts for less than 1 per cent of Canada's reserves. (More...)
- Singh said the investment demand for gold is likely to rise on the back of higher demand from exchange-traded funds and high networth individuals. (More...)
- Instead of turning to gold, Buffett sees Burlington Northern as a growth vehicle to earn more on the billions in cash Berkshire has on its books carrying coal, wheat and other resources across the nation. (More...)
- The bank said in a statement that the purchase "was done as part of the Reserve Bank's foreign exchange reserves management operations". (More...)
- China, whose $2.2-trillion in foreign reserves are the world's largest, was widely expected to snap up the bullion. (More...)
- The U.S. dollar is done! What you are seeing is the nations of the world coming to terms with the future. (More...)
- Spot platinum XPT= was at $1,355.50, compared with late previous session quote of $1,334 in New York. (More...)
- You might think that Warren Buffett's $34 billion bid for the rest of Burlington Northern Santa Fe ( BNI - news - people ) is the most eye-catching investment decision of the day. (More...)
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LONDON — 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. [1] Gold futures stormed to record highs Tuesday following news that India's central bank bought 200 metric tons of the precious metal from the International Monetary Fund last month. This alleviated past worries among traders on how the IMF might carry out its planned sales of 403.3 metric tons, meant to fund lending programs for poor countries, without adversely affecting gold prices, analysts said.[2]
Gold closed at a record $1,084.90 an ounce. Gold, which is up 23% this year, surged on Tuesday after the International Monetary Fund said it sold 200 metric tons of the precious metal to India's central bank. That sale heightened expectations that more overseas central banks will move to increase their gold holdings.[3] NEW YORK/LONDON (Reuters) - Gold swept to a record high above $1,080 an ounce on Tuesday, defying dollar strength as the International Monetary Fund's 200 tonne sale of gold to India's central bank boosted sentiment toward the metal.[4] GOLD jumped to a record $US1093.10 an ounce last night on heightened investor demand after India's central bank bought 200 tonnes of the metal from the International Monetary Fund, sparking speculation that more official purchases might follow.[5] The price of gold leapt to an all-time high as the decision to purchase 200 tonnes of gold from the International Monetary Fund highlighted the resilience of India's economy while laying bare a growing loss of global faith in the value of the U.S. dollar. Already the world's largest gold importer to fuel its massive jewellery consumption, the gold deal marks a major milestone for India and its standing in the global economy. Gold hit a record $1,088.50 (U.S.) an ounce as investors bet that Asia's emerging economic powers will buy more of the precious metal to diversify their foreign-exchange reserves against a weakening greenback."[6] India's purchase of about 200 metric tons of gold was a strong indication of the investment demand for the precious metal. "To see a central bank buy at this kind of level shows there are going to be a lot of other buyers out there," said David Beahm, vice president of economic research at Blanchard & Co., a precious metals investment firm. "It signals that there are people out there that think the price is going to continue to go up," he said. Beahm sees gold rising to as high as $1,150 an ounce by the end of this year. India, along with China and Russia, have indicated interest in buying gold as a way to diversify their holdings in dollar-denominated assets. The U.S. dollar has weakened considerably this year amid record-low interest rates, which have encouraged investors to look for higher-yielding assets, like stocks and commodities.[7] "To have India step in and buy half of the IMF gold was a big surprise," said Joe Foster, a precious metals analyst at Van Eck Global. "It shows that other central banks are looking to buy gold." Analysts say many monetary policy makers are looking for ways to reduce their exposure to the U.S. dollar, which is the traditional reserve currency of choice for many foreign central banks. The dollar, which is down 6% this year, has been pressured by concerns about the growing U.S. budget deficit and rock bottom interest rates.[3]
Now, suddenly, the market is considering the very real prospect that the rest of the IMF sales program could end up with central banks, and little, if any, will ever hit the streets. "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 reserves, and may want to diversify away from U.S. dollars," wrote Bart Melek, global commodity specialist at BMO Nesbitt Burns, in a research note. China, in particular, is rumoured to be eager to snap up the rest of IMF's gold, as it looks to diversify its own massive foreign reserves - an uncomfortably large amount of which is tied to the sinking U.S. dollar. This would keep a whole lot of gold out of the market, and that's what got traders excited Tuesday. Mr. Melek points out that such an event would essentially be "somewhat neutral from a supply/demand perspective" - since the sales would also remove open-market demand for gold from the central banks that are able to buy from the IMF instead.[8] Gold currently accounts for only 1.7 per cent of China's foreign reserves, making it a front-runner to buy the remaining 200 tonnes of IMF gold still up for grabs. "Who buys the rest of the IMF gold? 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 FX reserves, and may want to diversify away from the U.S. dollar," Bart Melek, global commodity strategist at BMO Nesbitt Burns, said in a report. India's willingness to buy a massive amount of gold near record prices helped the bullion price smash through its previous all-time high of $1,072 an ounce, hit last month.[6]
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 Gart-man Letter in Suffolk, Virginia. China, now the sixth-largest holder of gold, has increased its gold reserves by 76 per cent since 2003, to 1054 tonnes, the official Xinhua News Agency reported in April.[5] Analysts expect gold to continue to rise, possibly breaking through the $1,100 level, as other central banks look to buy the metal, traditionally regarded a hedge against inflation. Central banks buying directly from the IMF could force short sellers to cover positions, which would provide a further fillip to the market, they said. The IMF has announced plans to sell 403 tonnes of gold from its reserves of 3,217 tonnes as it seeks to raise money and increase its lending to developing countries. China is tipped as a possible buyer for the remaining IMF stocks as it looks to diversify its foreign exchange reserves away from the dollar. China has lifted its gold holdings in recent years from 600 tonnes to 1,054 tonnes, worth more than $40 billion. The Bank of England holds 310 tonnes after Gordon Brown sold 395 tonnes in 1999 when he was Chancellor.[9] MD Dominique Strauss-Kahn indicated that the proceeds from the gold sale will help the Fund, step up much-needed concessional lending to the poorest countries. As for the central bank, there is no official communication either being the intent of such a move or its plans for the purchased gold. Experts say the move could help the central bank diversify its reserves and would not have a significant impact on the overall foreign exchange reserves position, said a former top RBI official. These purchases are reckoned to be carried out from the $4.8 billion worth SDR allocation that the RBI had obtained from the Fund earlier this year. The IMF had allocated $4.8 billion by way of general allocation of special drawing rights (SDR) ''' the reserve currency with the IMF ''' in August this year as part of its SDR 161.2 billion package allocated to member countries.[10]
The average price achieved was $275 an ounce -- about a quarter of yesterday's price. Aram Shishmanian, chief executive of the World Gold Council, said: "Gold always plays an important role as a protector of wealth and, in these current times of financial instability, that role has taken on a new-found prominence. In light of the well-publicised concerns of many central banks over the level of their exposure to the U.S. dollar, further off-market transactions must be a clear possibility." Russia is another country that has been building its gold reserves in preference to U.S. dollars. It has added 95.8 tonnes in the past year and now holds 568.4 tonnes. Dominique Strauss-Kahn, managing director of the IMF, said: "This transaction is an important step to help to put the fund's finances on a sound long-term footing and enable us to step up much-needed concessional lending to the poorest countries."[11] Although an IMF gold sale had been flagged for some time, it lifted some uncertainty from the market by helping soak up potential supply. "The market is managing to decouple from the dollar on the news from the IMF - which begs the question: they've sold half of the 400 tonnes they have in this off-market transaction, will be they able to sell the balance to other central banks?" said Robin Bhar, metals analyst at Calyon. "I think the market is hoping that another announcement will be made for the balance," he added. The IMF sale, part of an agreement to sell about an eighth of the Fund's stock, fuelled speculation that other governments - including Beijing - may be ready to diversify their reserves even at near record prices. "It's a rumour but I'd say where there is smoke there is also some fire," said Commerzbank analyst Eugen Weinberg. U.S. traders also said the gold market was finding support from potential for accelerated producer buybacks in as miners are keen to back gold they had previously sold forward. Miners Anglogold Ashanti and Barrick gold both told Reuters on Monday that closure of their hedgebooks might happen ahead of schedule. AngloGold Ashanti said it may accelerate closing its hedgebook if conditions are right, while Barrick, the world's biggest miner of the precious metal, said it may complete the planned closure of its hedgebook before the end of the 12-month window. The dollar hit a one-month high against a currency basket on Tuesday as investors retreated from risk assets, before paring those gains.[12] NEW DELHI — A decision by the Reserve Bank of India to buy 200 tonnes of gold from the IMF for 6.7 billion dollars does not reflect a preference for the metal over the dollar, the finance minister said Tuesday. The International Monetary Fund kicked off its planned sale of more than 400 tonnes of gold with an announcement Monday that it had sold almost half to India, the world's biggest gold consumer, at near-record prices.[13] STAFF WRITER 10:25 HRS IST Lalit K Jha Washington, Nov 4 (PTI) The International Monetary Fund, which sold 200 tonnes of gold for about USD 6.7 billion to the Reserve Bank of India, today said it got a "good price," and wants to be similarly "lucky" in the next phase sale of the precious metal.[14]
The International Monetary Fund has sold 200 tonnes of gold to the Reserve Bank of India for $6.8 billion, quietly executing half of a long-planned bullion sale that has threatened to slow gold's ascent. The sale, which surprised traders who expected China to be the leading buyer, will relieve the gold market of some uncertainty over how and when the IMF would sell 403.3 tonnes of gold, about one-eighth of its total stock.[15] The Reserve Bank of India has purchased 200 tonnes of gold valued at Rs 31,490 crore ($6.7 billion) from the International Monetary Fund (IMF) under the latters's limited gold sales programme.[16]
There is only one aspect of the Reserve Bank of India'''s (RBI) purchase of 200 tonnes of gold from the International Monetary Fund (IMF) on which there is likely to be any unanimity: the element of surprise. With the U.S. dollar showing distinct signs of weakness (not surprising, given its weak macroeconomic fundamentals) and set to weaken further, it makes eminent sense to shift from a dollar-centric reserve basket to a more diversified one, long-term. Many countries have been doing a subtle re-balancing of their reserves for years; partly to insulate their reserves from dollar weakness and partly in preparation of the day when the dollar will no longer be the international reserve currency. The latter does seem a long way off at the moment and one could argue that gold is a poor alternative.[17] MUMBAI: The purchase of 200 tonnes of gold from the International Monetary Fund (IMF) by the Reserve Bank of India will not just diversify the country'''s foreign exchange reserves but also boost of the value of the reserves.[10] The RBI has purchased 200 tonnes of gold from the International Monetary Fund (IMF) for USD 6.8 billion. This move by the RBI is to diversify its foreign exchange reserves.[18]
"Secondly, it showed large buyers are ready to accept the current price levels." China is tipped as a possible buyer for the remaining IMF metal, because that country is thought to want to diversify its foreign exchange reserves from U.S. dollars into other assets. China has quietly lifted its gold holdings in recent years from 600 tonnes to 1,054 tonnes, worth more than $40 billion.[11]
WASHINGTON: India's purchase of $6.7 billion worth of gold from the International Monetary Fund (IMF) is a pointer that New Delhi sees a dim future for the dollar and is making a bullish call on the precious metal, according to a leading U.S. business magazine. "The move is already profitable as the Indians bought their gold at prices averaging around $1,000 an ounce.[19] The gold spot price hit a new high of $1,078 an ounce yesterday after India said that it would buy 200 tonnes of the precious metal from the International Monetary Fund (IMF).[11] The price of gold hit a record $1,092.60 an ounce today on the spot market, lifted by a weaker dollar and continued support from yesterday's news that India is to buy 200 tonnes of the metal from the International Monetary Fund (IMF).[9]
MUMBAI: A weak currency and RBI'''s 200-tonne gold purchase from the International Monetary Fund (IMF) thrust local spot and futures prices of the yellow metal to a record high on Tuesday. Gold of 99.5% purity in Mumbai was trading at a record high of Rs 16,280 per 10 gm at the time of writing, while gold for delivery in December on local bourse MCX was at a lifetime high of Rs 16,321 per 10 gm despite overseas gold trading $10 lower from its all-time high of $1,072 an ounce in the mid-October.[20]
India's central bank bulked up that nation's gold reserves by 55% with the purchase of $6.7 billion worth of gold from the International Monetary Fund, which is selling gold reserves to raise funds for lending to poor nations. The move is already profitable, as the Indians bought their gold at prices averaging around $1,000 an ounce.[21] NEW YORK — Gold prices are surging on news that India's central bank bought $6.7 billion worth of gold from the International Monetary Fund.[22]
The International Monetary Fund decided to sell some of its gold reserves to increase low-cost loans to poorer countries. India's purchase surprised traders, who had expected China - with its $2.5 trillion in reserves and its gold purchases since 2003 - to be the biggest buyer of the bullion put up for sale. Timothy Green says India is the biggest consumer of gold, primarily in the form of jewellery and investment, but until now its central bank has shown no interest in diversifying into bullion. "The Indians shall we say, being famous for centuries as privately for keeping much of their wealth in gold on them, but the Government, the central bank, is now starting to do the same thing. It's a very interesting trend," he said.[23] Now, when interest rates in the West are at rock bottom and affecting the dollar, central banks in emerging countries are actually buying gold. This week, the Reserve Bank of India announced the purchase of 200 tonnes of gold. China and Russia have been shoring up their gold reserves for some time, presumably to diversify away from dollar holdings.[24]
MUMBAI: The Reserve Bank of India (RBI) may move forward to accumulating more gold as the yellow metal is expected to shine in the years to come, an analyst with a broking firm said today. "A weaker dollar could diminish the value of India's foreign exchange reserves and hence this could lead to further accumulation of gold by the RBI. This move will help India's central bank to hedge its downside risk on the foreign exchange reserves front," Angel Commodities Broking analyst Amar Singh said. "India's gold holdings have dropped from over 20 per cent in 1994 to just 4 per cent," he said.[18] The sale by the IMF is the first in nine years and has lifted India to the ninth-biggest Government owner of the precious metal globally. India held gold reserves to the tune of 358 tonnes till 2008 and this addition of 200 tonnes has raised the gold reserve holding by a whopping 55 per cent. This purchase by the RBI could support international gold prices, Singh said.[18] Gold prices surged to a fresh record today on the news that India's central bank had bought 200 tonnes of the precious metal. It is the biggest single central bank purchase of gold made public in over 30 years.[23]
Bullion surged more than $30 (U.S.) to $1,085 an ounce in New York Tuesday, trouncing is record high set just three weeks ago, after the IMF disclosed that it had sold 200 tonnes of gold to the Reserve Bank of India - for the low, low price of just $6.7-billion.[8] The sale lifted some uncertainty from the market by helping soak up potential supply. "It all generates from the fact that the IMF sold 200 tonnes to the Reserve Bank of India. That is very bullish as it takes 200 tonnes away from the direct market," said Bill O'Neill, partner at New Jersey-based LOGIC Advisors. "That shows that future IMF sale will be conducted in a similar manner," O'Neill said. The IMF sale, part of an agreement to sell about an eighth of the Fund's stock, fueled speculation that other governments -- including Beijing -- may be ready to diversify their reserves even at near record prices.[4]
The deal will increase India's gold holdings to the tenth largest among central banks. It also fueled speculation that other governments -- including Beijing -- may be ready to diversify their reserves even at near-record gold prices, helping soak up IMF supply that the fund may otherwise be forced to sell on the open market. Should average investors follow India's lead -- or stay away from gold at these levels?In this earlier post I spotlighted two opposing views of the metal's near-term prospects.[15]
India's purchase of $6.7 billion gold from the IMF at prices above $1,000 an ounce says plenty about some central banks' preference for gold over dollars.[21] LONDON, Nov 4 (Reuters) - Spot gold ran to a record high above $1,090 per ounce on Wednesday, latching on to a weaker dollar with continued support from the IMF's sale of gold to India's central bank.[25]
"Could the Indian purchase be the catalyst that finally triggers a massive wave of speculation that drives gold to $1,200 or $1,300 an ounce, or even $2,300, where it would equal the former peak price when adjusted for inflation?" Lenzner wondered. Reached by Forbes in Toronto, Canadian venture capitalist and mining entrepreneur Frank Giustra, who has been since 2002 recommending investors diversify out of dollars and hedge their portfolios with at least 15 per cent in gold, opined: "No one wants U.S. dollars, and this is one way central banks can diversify out."[19] Gold closed at a record $1,085 an ounce Tuesday in New York," Robert Lenzner, National Editor of the Forbes magazine, noted in a commentary on Wednesday. The big buy from India, bulking up its gold reserves by 55 per cent, follows months of huge gold accumulation by Chinese authorities as well as hedge fund operators like John Paulson and others amid growing anxiety about the viability of the dollar as the world's reserve currency, he noted. Comparing history's most successful investor Warren Buffett's $34 billion bid for the rest of Burlington Northern Santa Fe, Lenzner said: "India, by comparison, is making a direct bullish call on gold, just as China, its major rival in Southeast Asia, did some months ago.[19] NEW YORK, Nov 3 (Reuters) - U.S. gold futures scaled an all-time high $1,088.50 an ounce on Tuesday in a technical breakout, surpassing the previous record set Oct. 14, as news of a gold sale by the International Monetary Fund to India boosted sentiment.[26] Gold futures hit fresh record highs a day after shooting higher in response to news that India's central bank had purchased 200 metric tons of gold from the International Monetary Fund.[27] The metal has been underpinned by follow-through technical buying and a soft dollar. This is occurring the day after it ignored dollar strength to break up through the prior mid-October record highs in response to news that India's central bank had bought 200 metric tons of gold from the International Monetary Fund.[28] Gold streaked to record highs today, nearing the $1,100-an-ounce mark, after India'''s central bank bought a load of the metal from the International Monetary Fund.[15]
Gold soared to a record high yesterday after India surprised the market with the biggest single purchase of the commodity by a central bank in the past 30 years -- a signal governments around the world are becoming increasingly uncomfortable about the sliding value of the U.S. dollar. "It's certainly indicative that the monetary authorities in India are not overwhelmingly upbeat about the outlook for the U.S. dollar," said Erik Nilsson, senior international economist at Scotia Capital.[29] A surprise move to snap up $6.7-billion (U.S.) of gold underscores India's economic ascendance and marks the strongest indication yet that the central banks of Asia's fast-growing nations are turning away from the U.S. dollar as the world's reserve currency.[6]
The IMF holds 3,217 tonnes of gold valued at $98.8 billion. The RBI's latest move to build its reserves around gold comes close to the central banks of other countries showing a similar trend of shifting away from holding their assets in dollar.[16] Between October 19 and October 30 the Reserve Bank of India purchased $7.5 billion worth of gold, 200 metric tonnes. "This is a sea change in the gold market on the central bank front, the whole equation has changed from central banks over a decade or two you're counting them as sellers, and now we're starting say maybe central banks are going to be buyers," said the author of "Ages of Gold", Timothy Green.[23]
The cost of an ounce of gold rose US$30.90 yesterday to hit a record US$1,084.90 after it was announced the Reserve Bank of India had purchased 200 tonnes of the precious metal from the International Monetary Fund.[29] Marketmen said the rising trend was boosted after reports that the precious metal in overseas markets reached an all-time high of USD 1,092.40 an ounce after the Reserve Bank of India bought 200 metric tons of gold from the International Monetary Fund, raising speculation more countries will follow suit.[30]
Sentiment remained extremely bullish on gold's fundamental and technical outlook, with bulls emboldened by Tuesday's news that the Reserve Bank of India had bought 200 metric tons of gold from the International Monetary Fund.[31]
STAFF WRITER 16:13 HRS IST New Delhi, Nov 4 (PTI) Gold touched a record high of Rs 16,800 per 10 gram in the bullion market here today amidst reports of massive gold buying by the Reserve Bank from the International Monetary Fund.[30]
Spot gold rallied to a new record high Wednesday as investors were further emboldened by Tuesday's news that India had purchased 200 metric tons of gold from the International Monetary Fund, Dow Jones' Matthew Walls reports.[32]
Prices settle near $1,085 an ounce after India buys $6.7 billion worth of gold from the International Monetary Fund.[33] The price of gold has touched an all-time high after a large sale of the precious commodity by the International Monetary Fund (IMF) to India.[34] RBI announced that it had concluded the purchase of 200 metric tonne of gold from the International Monetary Fund (IMF), under the Fund'''s limited gold sales programme.[10]
The sale price of gold to the RBI is expected to be under USD 1,045 per ounce, nearly USD 200 per ounce higher than what it would have been anticipated in mid-September, a senior IMF official told reporters in a teleconference. When the IMF Executive Board at its meeting on September 18 announced to sell 403.3 tonnes of gold - one-eighth of the Fund's total holding ?- the prevailing market price of the bullion at that time was about USD 850 an ounce. "Obviously, it's a good price relative to the original assumptions," the IMF official said.[14]
Many experts believe China or Russia may buy the remaining tons of gold IMF wants to liquidate. Make no mistake about it: Central banks have not been liquidating their gold. This sale by the IMF is therefore an extraordinary event at a time when there is little gold supply to meet the burgeoning demand by investors wary of paper currency. Trillions of dollars have been injected into the financial system to save it from Armageddon; they must find a home somewhere.[21] The Dollar Index has weakened sharply and at the same time gold prices have gained phenomenally," Singh said. "Prices of gold are expected to rise further and this has initiated the move by the RBI to diversify the foreign exchange holdings." India is the world's biggest gold consumer and the RBI's move indicates the central bank wants to diversify its holdings to protect against a slumping dollar, he said.[18] Gold prices have been moving up faster than the major global currencies ''' which is expected to boost the value of the country'''s foreign exchange reserves. This is the first time that the Reserve Bank has bought such a large amount of gold globally. Interestingly, the market import of gold has dipped sharply this year on account of high international prices and low demand.[10]
The IMF owns more than 3,000 tonnes. Bart Melek, global commodities analyst at BMO Capital Markets, said the Reserve Bank of India's gold purchase pushed the country's gold reserves up to 7.1% of its total reserve assets. He said other countries, including China and Russia, have also been buying more gold, a trend likely to continue while the U.S. economy remained volatile. On average, countries hold about 12.6% of their reserves in gold, up from 9.9% a year ago. Some of this represents an increase in gold holdings, but another driver of the increased proportion is the rise in the value of gold.[29] There is a certain amount of confidence that comes with gold, particularly in India," said DundeeWealth chief economist Martin Murenbeeld. Western central banks have hoarded gold for years as part of their foreign reserves and now India and China are emerging as significant bullion buyers as they try to spread out their exposure to U.S. dollar-denominated investments such as bonds and treasury bills. "As these countries are growing and becoming more important players, they are recognizing the value of defending your currency and having it backed, to a certain amount, by gold," said Charles Oliver, a portfolio manager with Sprott Asset Management Inc.[6]
"The question now is, who buys the rest of the IMF gold?" said Melek. "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 U.S. dollars."[1]
India's move also amounts to a bullish call on the long-term price of gold. India paid the IMF $6.7-billion (U.S.) to increase its gold reserves to 557.7-million tonnes from 357-million tonnes.[6] The Reserve Bank of India's $6.7 billion (£4 billion) deal removed concerns that the IMF's gold could flood the retail market and weigh on prices.[9] The IMF said Monday that it had sold 200 metric tons of gold to the Reserve Bank of India for $6.7 billion.[33]
Gold futures buying increased after the IMF sold 200 tonnes of gold to the Reserve Bank of India.[26] A senior IMF official said that the IMF was "lucky" in selling the 200 tonnes to India for roughly 1,045 dollars an ounce, compared with 850 dollars an ounce in April 2008. Gold's price, which has risen more than 20 percent this year, has a bright future thanks to improving demand caused by the financial crisis, industry experts said this week. "Although it's difficult to predict in the short term, the overall picture is very healthy," Mark Lynam, an executive for AngloGold Ashanti -- the world's third largest gold producer -- told the London Bullion Market Association annual conference in Edinburgh.[1]
"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.[1] Buying on the back of the IMF's announcement on Tuesday that it had sold 200 tonnes of gold to India's central bank pushed prices through key technical resistance levels, triggering fresh buying, traders said.[25] Sentiment strong on expectations of renewed central bank interest after IMF sold 200 tonnes of gold to India on Monday.[35] Buyers moved in after the IMF decision to sell 200 tonnes of gold to India's central bank.[34]
Gold boosted on the notion that India could buy more from the IMF, or more IMF gold could be sold to central banks without weighing down on the open market - traders.[35] "The market realized. that there are enough central banks which are looking to buy the gold from the IMF direct and so it is not coming into the market, so the shorts had to cover," said Michael Kempinski, a senior trader at Commerzbank.[25]
The prospect of the IMF and other gold-rich central banks selling off gold reserves to the open market was one of the few factors out there weighing gold prices down.[8] The paradox was seen in a new light a decade or so ago: Long-term real interest rates and gold prices moved in opposite directions. Critics of easy money policy then claimed that Western central banks were selling gold to bring down gold prices ''' which would suggest an interest rate increase ''' and thus disguise their policies.[24] Gold is traditionally considered as a safe haven investment. This development could be positive for the gold market and the yellow metal could test new highs in the coming months. What can further add to the upside in gold prices is the move by Russian and Chinese central banks to purchase the yellow metal, he said.[18] NEW YORK (CNNMoney.com) -- Gold rose to an all-time high Wednesday amid a weaker dollar and speculation that foreign central banks would increase their purchases of the precious metal.[3]
NEW YORK, Nov 4 (Reuters) - U.S. gold futures hit fresh record highs on Wednesday for a second straight day and are approaching $1,100 an ounce, as a weaker dollar boosted the metal's appeal as a hedge against currency depreciation.[35] Gold futures have extended the fresh record highs reached overnight during New York hours Wednesday, with psychological resistance at $1,100 an ounce not far away.[28]
Gold for delivery in December touched $1,088.50 an ounce in New York yesterday. "Gold is sneaking back into some kind of a role in the international monetary system. the central bankers are indicating, particularly ones that have large amounts of foreign-exchange reserves, that they are very comfortable holding such a historic asset as gold," Mr. Murenbeeld said.[6]
With the opening up of the economy, gold smuggling has virtually stopped. For many year'''s the central bank gold holdings remained constant at about 11.5 million troy ounce accounting for 4% its reserves worth $285 billion now.[10] August 1999 - Gold falls to a low at $251.70 on worries about central banks reducing reserves of gold bullion and mining companies selling gold in forward markets to protect against falling prices.[36]
October 1999 - Gold reaches a two-year high at $338 after agreement to limit gold sales by 15 European central banks.[36] Eugen Weinberg, analyst at Commerzbank, said that there were a number of reasons why the market had been cheered by India's purchase. "Gold was kept off the market and sold directly to central banks, so potential sales on market are limited by this," he said.[11]
The purchase "doesn't mean we don't prefer the dollar any more or like gold any better," Finance Minister Pranab Mukherjee told reporters in New Delhi. Some analysts expect central banks around the world to diversify their holdings and purchase more gold as a shield against a weakening dollar.[13]
India's purchase of $6.7 bn worth of gold from IMF is a pointer that New Delhi sees a dim future for dollar, according to a leading U.S. business magazine.[19] Fear of a continued devaluation of the dollar, fear of the massively swelling national deficit and debt, fear of consumer inflation, fear of anything that isn't a hard asset. You want fear? Check this out: The government of India on Monday bought 200 metric tons of gold from the IMF, nearly half of the 403 tonnes that was up for sale in September. India bought all this gold at the height of the market, with no bulk discount. This of course drove up the price of gold.[37] India's purchase of about 200 metric tons of gold is seen as a strong sign of demand for the precious metal and an indication that investors believe the price will continue to march higher. India, along with China and Russia, have indicated interest in buying gold as a way to diversify their holdings in dollar-denominated assets as the dollar weakens. Other precious metals have risen along with gold.[22] The gold price has been rising in recent months as countries and investors seek an alternative to the weakening U.S. dollar. Gold has also traditionally been seen as a hedge against inflation and the combination of these factors has more than offset falling demand for gold jewellery. The spot price hit a record, while the London afternoon fix, the London Bullion Market's official price, closed at $1,061 an ounce, just below its record $1,066 set last month.[11] More to the point was that the gold price jumped by more than $US30 an ounce to an all-time high of $US1087 an ounce on news of the Indian acquisition. All that was while the U.S. dollar was feigning a rally from its beaten-up levels.[38]
A stronger U.S. dollar is normally bad news for the gold price. This time around, on-going concerns about the messed-up U.S. economy meant no one was pondering that point for too long. Now if it is good enough for the Indians to increase their use of gold as a reserve asset, what about the Chinese? For all of its growing economic might, China's gold holding as a percentage of official reserves is tiny. That's one of the reasons the gold bulls out there will give you to support an argument that gold's run has only just begun.[38] "Bear in mind too that we're talking about a jurisdiction that has had a long standing love affair with gold." Mr. Nilsson said India had increased its gold reserves to hedge against its U.S.-dollar holdings, which total about US$268.4-billion. He said the increasing demand for gold as a hedge against the greenback was helping to set the stage for an alternative reserve currency or asset to the U.S. dollar, a proposal that has been trumpeted by countries such as China, France, India and Russia. Any such change would not come quickly, Mr. Nilsson said.[29]
The sales took place over the past two weeks, and represent almost half of the IMF's previously announced 403.3-tonne gold sales program. I t's easy to see how this is good news for the IMF, which sold at the top of the market to raise much-needed funds to get its finances on a more solid footing, after financial-crisis-related bailouts had drained its coffers. India seems pretty happy, too, converting some of its ample foreign-currency reserves into a rock-solid asset and better diversifying its central-bank holdings. Precisely because this gold never hit that open market, and never will.[8] In the month of September, reserves rose $485 million only on account of the rise in valuation of gold in reserves. In its official release, IMF has said that the total sales proceeds are equivalent to US$6.7 billion or SDR 4.2 billion.[10] The then Prime Minister, P. V. Narasimha Rao, and the Finance Minister, Dr Manmohan Singh's immediate response was to secure an emergency loan of $2.2 billion from the IMF. The Government had to offer the country's gold reserves as collateral.[16]
The bank said the purchase "was an official sector off-market transaction and was executed over a two-week period during October 19-30, 2009 at market-based prices". The IMF is selling the gold to raise resources to augment its operations and provide concessional loans to poor countries. Its current gold stock of 357 tonnes is valued at around 9.6 billion dollars.[13] STAFF WRITER 21:50 HRS IST New Delhi, Nov 3 (PTI) The government today said the RBI's move to buy 200 tonnes of gold from multilateral lending agency IMF provided a healing touch to the nation's pride that was dented about two decades back when the country sold its gold for a few hundred million dollars.[39] The IMF said on Monday it had sold 200 tonnes of gold to India for US$6.7-billion.[12]
India has done the local gold sector a big favour by stepping up to buy 200 tonnes of the yellow metal from the pin-striped global do-gooder, the International Monetary Fund.[38] Finance Minister Pranab Mukherjee said one should not read much into the RBI's purchase of gold from the International Monetary Fund, but added it is significant as it reminds of the days when India's sentiments were outraged. "It has much more significance because for many of you it is not the remote past,. how the sentiments of the country felt outraged when we had to pledge gold to Bank of England just for borrowing few hundred million dollars to maintain our essential import requirement," he said at the Economic Editors' Conference here.[39]
The Reserve Bank of India paid $US6.7 billion ($A7.4 billion) for the bullion, which it bought between October 19 and last Friday. 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.[5] We were able to pledge it with the Bank of England and the Bank of Switzerland to give us the much-needed breather. Today, with reserves of $285 billion, and likely to grow as dollar inflows resume, the purchase, entailing a payout of little less than $7 billion, is too insignificant an amount for anyone to lose sleep over it, except for its symbolic value. That symbolic value would be to further feed the gold frenzy that has Indians in a perpetual grip.[17]
This week, the Reserve Bank of India announced the purchase of 200 tonnes of gold.[24] The purchase by the Reserve Bank of India underscored gold's increasing status as an official reserve.[4]
The recent purchase of close to 6.5 million troy ounce would raise the share of gold in India'''s foreign exchange reserves to about 6%.[10] Of the total foreign exchange reserves of $286 billion as on October 23, the RBI holds gold valued at $10 billion.[16]
December gold GCZ9 settles up $30.90, or 2.9 percent, at $1,084.90 an ounce on the COMEX division of the New York Mercantile Exchange.[26] The move was replicated on the Comex division of the New York Mercantile Exchange, which saw December gold peak at $1,081.70/oz. After reducing their positions in gold over the.[40]
Spot gold hit a record high of $1,092.60 an ounce and was bid at $1,091.05 an ounce at 0915 GMT, compared with $1,084.50 late in New York on Tuesday.[25] Near-term gold futures in New York surged $31.70, or 3%, to $1,085.10 an ounce.[15] Spot gold was at $1,087.25 per ounce at 2:20 p.m. EST, up 2.6 percent from $1,059.15 quoted late in New York on Monday.[4] Spot gold XAU= was at $1,091.70 per ounce, up from $1,084.50 quoted late in the previous session in New York.[35]
Gold struck a high of $1,095.05 an ounce in London, against $1,084.50 late in New York on Tuesday.[34]
"The market was expecting the sale to happen over several years," said Tom Pawlicki, a precious metals analyst at MF Global in Chicago. "It's pushing gold higher because it means that gold won't come onto the open market." Gold prices were also supported by news that Barrick Gold Corp. ( ABX ) bought back 1 million ounces of gold in its hedge book during October. The mining company said Monday it expects to unwind its remaining gold hedges, totaling 1.9 million ounces, by September 2010.[33] For a bit more explanation of exactly why India's purchase was so supportive of gold prices, we turn to Tom Pawlicki, a precious metals analyst with MF Global.[32]
India is the world's biggest consumer of gold, importing between 700 and 800 tonnes of the metal every year or 20 percent of global demand.[1] India is already the world's largest consumer of gold, accounting for about 20 per cent of global demand. It imports between 700 and 800 tonnes every year for use in jewellery.[6] Less than two decades ago, a crushing financial crisis forced India to physically ship its gold reserves to London as collateral for an IMF loan. Now, with an economy that is expected to grow by 6 per cent this year, India is helping the IMF shore up its finances by buying a big chunk of the organization's gold.[6] WASHINGTON: In yet another sign of global economic recovery, across the G-20 nations including India, the average overall deficit is projected to fall from 7.9 per cent of GDP in 2009 to 6.9 per cent of GDP next year, according to the IMF. Both these figures are somewhat better than projected in July 2009, the International Monetary Fund (IMF) said in its latest edition of the Cross-Country Fiscal Monitor released here on Tuesday.[41] OTTAWA -- Credible exit strategies for industrialized countries will need to go well beyond unwinding stimulus programs, and could include measures such as a freeze on government program spending, tax increases, and hikes in interest rates of at least two percentage points, the International Monetary Fund said in a report Tuesday. "Many advanced economies entered the crisis with relatively weak structural fiscal positions, and these have been eroded further, not only by measures but also by underlying spending pressures," the IMF said in a report on the state of global public finances. "This will raise the bar on fiscal adjustment.[42] New IMF research shows that to stabilize the debt levels global interest rates would need to rise by as much as 2 percentage points. "(Fiscal) support remains appropriate, it remains extremely important, because even if the global economy is recovering this recovery is still fragile," said Carlo Cottarelli, director of the IMF's Fiscal Affairs Department. Speaking on a conference call with reporters, he said fiscal policy in advanced economies would likely remain supportive through next year, but fiscal tightening is expected to begin in 2010 in faster-growing emerging market countries.[43]
Government debt in advanced G-20 economies is projected to reach 118 per cent of GDP in 2014. New IMF research confirms that stabilising debt at these levels would imply increases in interest rates of up to 2 per centage points globally.[41] The IMF said research suggested the 40-percentage-point increase in government debt ratios projected for advanced countries during 2008'''14 could raise interest rates by two percentage points.[42]
The IMF is slated to sell another 200 metric tons of gold and many analysts expect China to be a significant buyer. The Russian central bank has also expressed interest in expanding its gold hoard. "You have countries that believe gold is going to go higher, otherwise they wouldn't be making these long-term purchases," said Adam Klopfenstein, senior market strategist at commodities brokerage firm Lind-Waldock. "That's the main catalyst propelling the market higher."[3] The United States holds more than 8,000 tonnes, the world's largest central bank reserves of gold. The Bank of England holds 310 tonnes after Gordon Brown sold 395 tonnes in 1999 when he was Chancellor.[11] The purchase confirmed that while central banks around the world have different views on gold's status as an official reserve, every time there is seller, there is a buyer on the other side of the deal.[38] Total central bank holdings of gold is around 30,000 tonnes, the same level as 60 years ago, over which period world output has grown some 13 times.[17]
Beyond the gold-buying from the Indian central bank, there were other bits of news that seem to be helping the price of gold. For one thing miners Barrick Gold and AngloGold Ashanti told Reuters they might speed up their unwinds of their hedged positions on gold.[32] "And in terms of a gold producing country like Australia and other places, that is a very significant change." He says the global financial crisis has made central banks rethink how they store wealth and hedge against inflation.[23] According to the World Gold Council's latest report, the RBI has become the 11th largest gold holder among various central banks, placing it ahead of the European Central Bank but behind Russia's.[16]
The precious metal continues to push higher one day after India makes a major purchase, raising bets that demand from central banks will rise.[3] The central bank's stock of the precious metal increased to 557 million tonnes from 357 tonnes, a jump of over 55 percent.[13]
On the physical investment side, the picture still looked subdued. The world's largest gold-backed exchange-traded fund, SPDR Gold Trust GLD, said its holdings stood at 1,103.519 tonnes as of Nov. 2, unchanged from the previous business day. Other precious metals rallied in gold's wake, with silver XAG adding 2.8% to US$16.90 an ounce, against US$16.43 an ounce late on Monday.[12] The Washington-based IMF, which currently holds 3,217 tonnes of gold, is the third-largest official holder of the precious metal after the United States and Germany.[1] IMF is the world's third largest holder of gold, after the United States and Germany. Other precious metals followed gold higher.[7]
For gold bulls, the purchasedamped fears that long-planned IMF sales would drive bullion prices down sharply -- and threaten the now nine-year-long bull market in the metal.[15] Though the latest IMF sale will not have an impact on domestic gold prices, it would clear the misconception that the prices would crash post-IMF gold sale and reverse the weakening trend of dollar against other currencies.[16] The sale was part of an ongoing IMF plan aimed at selling over 400 metric tons of gold. The move eased some concerns that such a big influx of supply could weigh on prices. It also raised speculation that China, which many analysts had expected to be the main buyer, will absorb much of the remaining gold in the IMF's stockpiles.[33] The sale now takes away the possibility of the gold being sold on the open market, which will prevent the supply side of the supply/demand balance table from ballooning. It's also positive for gold prices because China lingers as a potential buyer of gold in their effort to diversify their forex reserves. In April '09, China announced that it bought 454 tonnes between 2003-2008 from indigenous producers and has since discussed plans to further diversify its forex reserves.[32] China has increased its gold reserves by 76 per cent since 2003 to 1,054 tonnes. It has publicly stated its intention to diversify its foreign-exchange reserves with investments in "hard assets," including commodities such as copper, oil and gold.[6] Gold now accounts for about 6 per cent of India's $285.5-billion in foreign-exchange reserves, up from 4 per cent.[6] As recently as 1994, gold accounted for more than 20 per cent of India's foreign reserves, but the South Asian country's increasing investments in U.S. treasuries and other greenback- denominated securities diminished gold's standing in the portfolio.[6]
" -- Charles Oliver, Sprott Asset Management Inc. That's still relatively low compared to most European countries, where gold makes up about 15 per cent of reserves.[6]
Reuters - Gold raced past it's fourth record high in a month, cresting $1,080 per ounce before easing slightly on Wednesday, with investor sentiment reflecting bullion's growing status as a destination for a diversifying official reserves.[36] Gold is shooting toward $1,100 per ounce in trading today, already having blown through its record highs. I wrote a lengthy piece on the price spike in gold in late September, when gold was on its big rise.[37]
Technically after gold prices crossed a high of USD 1,033 per ounce in March 2008, prices have continued trading higher.[18]
The gold is valued at the month end closing price on the London bullion exchange. With international gold prices touching a new high every day, this part of the reserves has seen a sharp appreciation.[10] Brian Christie, analyst at Desjardins Securities, said central-bank demand would be an important driver of the gold price, with India's purchase adding to the positive momentum for the commodity.[29] "China is rumoured to be interested in some or all of the remaining IMF bullion; however, it is likely very sensitive to price," Mr. Christie said. "Since the transaction with India was done at fair market value, the Chinese could be waiting for a pullback in the gold spot before pursuing this purchase further."[29] India's decision to purchase half of the 403.3 tonnes of gold the IMF put up for sale in September surprised many gold-market observers.[6] The sale to India was nearly half the 403.3 tonnes of gold the IMF has targeted for sale over the coming years.[34] The IMF Executive Board in September decided to offload 400 tonnes of gold annually, totalling 2,000 tonnes in the next five years, besides the regular on-market sale.[16]
Timothy Green, author of The Ages of Gold, said it was "the biggest single central-bank purchase that we know about for at least 30 years." The purchase amounts to almost half of the 403.3 tonnes the IMF approved for sale in September to diversify its sources of funding.[29]
The IMF has announced plans to sell 403 tonnes of gold from its reserves of 3,217 tonnes as it seeks to raise money and increase its lending to developing countries.[11] The dollar later retreated. The IMF has set out to sell about 400 metric tons of gold this year in an effort to shore up its finances and increase lending to developing countries.[7]
The IMF said Mauritius' prompt, coordinated response to the global downturn, which included a $340 million stimulus and monetary loosening, had cushioned the crisis' impact and better positioned the nation of 1.3 million people to recover from an upturn in the world economy. The IMF did not offer a precise growth forecast for 2010 as it concluded its annual Article IV consultations. Best known for its palm-fringed shores and azure waters, Mauritius suffered as the worldwide economic slump hurt its tourism revenues, squeezed demand for textiles and slowed business in its offshore banking sector. Finance Minister Ramakrishna Sithanen, who will read his 2010 budget in two weeks time, expects the $9 billion economy to grow by 4.5-5.0 percent next year.[44]
The reworked Signature Metals (ASX:SBL) is one of many Perth-based explorers looking to make it big in Africa. Its main go is the Konongo gold project in Ghana's Ashanti gold belt. It was a producer in years gone by (1.6 million ounces at a more than handy grade of 11.8 grams of gold a tonne) and comes with a compliant resource of close to 1 million ounces across a number of deposits, as well as a mothballed treatment plant. Signature wants to return the project to life as a 100,000 ounce-a-year producer and reckons its tenements have an "exploration potential" of 1.5-2.5 million ounces of gold. That's all very interesting for a stock that closed on Tuesday at 3.3 cents a share for a market capitalisation of about $25 million.[38] A barrage of gold recommendations has come my way over the years from all stripes of investors and entrepreneurs. Christopher Wood, emerging markets analyst for CLSA Securities in Asia, began recommending the purchase of gold bullion at $375 an ounce in the early part of this decade. He has not abandoned his prediction that gold will rise to $3,400 an ounce sometime in the next several years and no doubt must have some very pleased clients.[21] The new high was reached 2 hours after the close of Australian trade, when gold was selling at $1083.25 an ounce ''' a gain of $US19.28 on Tuesday's close. "This will encourage other countries and other investors, especially Indians, who are big buyers anyway, to jump into the market," said Leonard Kaplan, president of Prospector Asset Management in Evanston, Illinois.[5]
"What's interesting is that the growth part of the world is the buyer," says Frank Holmes, CEO of U.S. Global Investors ( GROW - news - people ), a mutual company in San Antonio that specializes in natural resource stocks. "This is another sign of the wealth shift from the developed toward the developing markets," says Holmes, noting Indians' "cultural affinity" for gold. "It's how they store their wealth, and they can wear it as jewelry."[21] Gold and other commodity prices have surged recently as investors have moved away from the U.S. dollar.[34] As governments continue to hoard gold (China is doing it, too), the price will continue to climb. This is a direct comment on the rest of the world's faith in the U.S. dollar, which continues its year-long slide.[37] " The Indian government has recognized it has a huge U.S. dollar reserve pot and the domestic interest may be to have more gold[6]
The big buy from India follows months of huge gold accumulation by Chinese authorities, as well as hedge fund operators like John Paulson and others amid growing anxiety about the viability of the dollar as the world's reserve currency.[21] Gold boosted on the notion that India could buy more from the IMF, and news that gold producers could accelerate hedge buybacks should support - Heraeus.[26] India's purchase of IMF gold is also seen as an effort by the country to have a greater say in IMF decision making.[23] '''The gold purchase by IMF will lead to a spike, but that won'''t sustain,''' said Rajesh Mehta, chairman, Rajesh Exports ''' India'''s largest exporter of gold jewellery.[20]
A senior IMF official said that the IMF was "lucky" in selling the 200 tonnes to India for roughly 1,045 dollars an ounce, compared with 850 dollars an ounce in April 2008.[13]
LONDON (Dow Jones)--Gold prices are defying a stronger dollar and are at new all-time highs Tuesday, with the spot market touching $1,081.05 a troy ounce as speculative interest in the precious metal recovers.[40] August 1971 - United States President Richard Nixon takes the dollar off the 'gold standard', which fixed paper notes value to a pre-set quantity of gold. It had been in place, with minor modifications, since the Bretton Woods Agreement of 1944 fixed the conversion rate for one Troy ounce of gold at $35.[36] U.S. December gold futures settled up $30.90, or 2.9 percent, at $1,084.90 an ounce on the COMEX division of NYMEX.[4] U.S. COMEX gold futures also hit an historic $1,093.70 in electronic trade, and were later up $7.40 at $1,092.40.[25]
The fact is that the RBI looked at $1,000-an-ounce gold and was still willing to buy an awful lot of gold at that elevated price. [8] The metal is in a secular bull trend and the dollar index is in a secular bear trend. This further indicates that a weaker dollar could continue to support an upside in gold prices as it makes the metal look attractive for holders of other currencies, the analyst said.[18] Look at how gold has soared 51% over the past year while the U.S. dollar index is down 10%.[21] A strong dollar makes gold and other commodities priced in the U.S. unit less attractive for non-U.S. investors but gold bucked the trend.[12]
India is now the ninth largest government owner of gold with 550 tonnes - still a long way behind the U.S. Government.[23] Industry sources said India'''s gold imports during October fell to 27 tonne from 44 tonne in the year-ago period.[20]
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.[1] Ever since the IMF decided to start selling gold, market watchers had been bracing for a possible flood of gold supply that would take the wind out of gold's sails. The fact that the IMF sold fully half of its gold program to a single buyer, off-market, in one fell swoop just six weeks after approving the sales program, caught the gold market by surprise.[8] Mr Dominique Strauss-Kahn, Managing Director, IMF, said in a statement, "The transaction is an important step toward achieving the objectives of the IMF's limited gold sales programme."[16]
News led to expectations that IMF's remaining 203.3 tonnes for sale will be concluded with minimal impact to open market.[26]
"I always thought that some of it would be sold off-market, but it was a bit of a surprise that as much as 200 tonnes had been sold off-market," Bank of Nova Scotia director of precious metals sales Simon Weeks told Reuters.[8]
For the past 18 months, I've been advised by Canadian venture capitalist and mining entrepreneur Frank Giustra to purchase gold. Giustra, who has invested in gold mines from Canada to Venezuela to Africa, holds roughly 30% of his net worth in gold. He buys gold certificates in Zurich, Switzerland, and then takes them to a bank there to be exchanged for the metal.[21] In the broader markets, European stocks fell to a one month low as banks suffered poor results. Declining equity markets used to boost gold's safe haven appeal, but they have recently worked to increase safe haven flows to the dollar.[12] Back in 1991, when our forex reserves were down to little over one billion dollars, it was the RBI'''s hoard of gold that came to our rescue.[17] Traders say gold could emerge as the "new dollar" when it comes to reserve currencies.[3]
Spot gold XAU stood at US$1,077.15 per ounce at 1645 GMT, up 1.7% from US$1,059.15 quoted late in New York on Monday.[12] Silver also shot higher today, with November futures up 45 cents to $16.89 an ounce in New York.[15]
December silver SIZ9 up 34.5 cents, or 2 percent, at $17.525 an ounce, rising with gold.[35] The previous intraday record was set Oct. 13, when gold rose to $1,069.70 an ounce.[33] Getty Images Spot gold hit a record high of US$1,075.10 per ounce Tuesday morning.[12] LONDON (Dow Jones)--Spot gold rallied to a fresh record high Wednesday as the dollar weakened and sentiment remained bullish following the.[45] LONDON (Dow Jones)--Spot gold rallied to a fresh record high Wednesday, extending the previous day's surge on follow-through buying and options-related short-covering.[31]
Gold's march to record levels is set to fire up trade in the gold exploration stocks, the most leveraged of plays to periods of bullish investor sentiment towards the metal. [38] 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.[1]
Gold's sharp rally in spite of a dollar rise showed that strong demand will continue support the metal.[4] Gold's rally in the face of a stronger dollar also signaled the metal could rise further, dealers said.[4]
Gold and other commodity prices have surged in recent months amid a move away from the dollar, which has been slumping.[1] The uptrend in gold prices may continue with global economic revival stoking concerns over inflation, said Mr Harish Galipelli, the Vice-President (Research), JRG Wealth Management.[16] PORT LOUIS (Reuters) - Mauritius should hold its benchmark lending rate steady at 5.75 percent but keep an eye on consumer prices as the global economy rebounds, the International Monetary Fund said.[44] WASHINGTON (Reuters) - The International Monetary Fund Tuesday projected higher debt levels for the world's major economies but emphasized it was too soon to begin scaling back fiscal support for their economies. In its latest edition of "Cross-Country Fiscal Monitor," the IMF said government debt as a percentage of gross domestic product in the major economies is projected to reach 118 percent in 2014.[43]
"The effects are even larger for countries that start from high debt ratios or deficit levels, or that confront faster population ageing," it said. Canada is in better shape than most, the IMF said, noting its debt-to-GDP ratio by 2014 will be "well below" the 90% level, compared with the projected 118% the U.S. is expected to record.[42] Stabilizing debt levels would imply higher interest rates, the IMF said, by an amount equalling at least two percentage points.[42] Official data forecasts 2009 growth at 2.7 percent. "Pending further indications on economic prospects, the interest rate should be maintained at its current level, remaining vigilant should inflationary pressures arise as the world economy recovers," Atish Ghosh, IMF mission chief for Mauritius said in a statement released late on Tuesday.[44]
If the Fed were to give a more upbeat outlook on the economy and signal that it may raise interest rates sooner rather than later to ward off inflation, the dollar could rise, potentially crimping foreign demand for commodities and hurting prices.[7] Dollar-denominated commodities become more expensive for foreign buyers when the greenback rises. The dollar could weaken further and thereby boost commodities prices if the Fed maintains its stance that it plans to keep interest rates low for the foreseeable future.[7]
Cottarelli said it was important that governments design and communicate credible exit strategies to ensure the rise in public debt does not prompt concerns about fiscal policies, which may give rise to higher interest rates. "That is why we believe it is important over the medium term that fiscal adjustment takes place," Cottarelli said. "This is not the moment to tighten fiscal policy, but it is the time to think how to adjust fiscal policy in the future if we want to avoid an increase in interest rates and for crowding-out effects which would lower potential growth over the medium term," he told a conference call with reporters.[43]
"We wouldn't be surprised to see US$1,100. Looking ahead, the U.S Federal Reserve begins a two-day policy-setting meeting later this session. While the bank is expected to keep benchmark interest rates unchanged near zero, there is speculation it might alter its pledge to keep rates low for an "extended period."[12] Many investors are eager to hear what the Federal Reserve has to say about the economy and its outlook on interest rates at the end of a two-day policy meeting on Wednesday.[7]
Despite Canada's status as a major producer and home to some of the world's largest gold-mining companies, gold accounts for less than 1 per cent of Canada's reserves. [6] The simulations suggest potentially more adverse debt dynamics for countries where debt levels were higher at the onset of the crisis or where fiscal balances have deteriorated sharply during 2009. Even in the baseline, debt ratios will remain above 60 per cent of GDP for Brazil and India and will increase markedly for Mexico, South Africa, and Turkey, the Fund said, noting: "The results underscore the importance for these countries of securing the projected medium-term fiscal adjustment."[41] To get debt below 60 per cent by 2030 will require raising the average structural primary balance by 8 per centage points of GDP over 2010-20 and then keeping it there for a further decade. This could be achieved by a combination of non-renewal of stimulus measures; a freeze in real per capita spending excluding pensions and health; reforms to keep the growth of pension and health spending in line with that of GDP; and tax increases averaging about 3 per centage points of GDP for advanced G-20 countries. Fiscal policy will continue to provide substantial support to aggregate demand in most countries this year, and is projected to remain supportive of economic activity in advanced countries in 2010, the Fund said.[41]
Singh said the investment demand for gold is likely to rise on the back of higher demand from exchange-traded funds and high networth individuals. This rise will help compensate for the decline in consumer demand for jewellery and fabrication on the back of high prices. [18] The price of gold is typically strong in the October to December period because of the higher demand for jewellery in the run-up to Christmas and the Indian festival of Diwali.[34]
In order to wiggle out of a hedge, a company has to buy back gold. That buying pressure could be another support for prices.[32] Gold's sudden rally supported by heavy buy stops at $1,069 to $1,070 -- a technical triple top - trader. Barrick Gold and AngloGold Ashanti said they could accelerate hedgebook cuts.[26] Gold went from $100 in 1976 to $850 in 1980. This gold bull began at $250, suggesting a peak around $2,125 an ounce before this one's over.[21] November gold rose $30.90 to settle at $1,084.90 an ounce, after climbing to a high of $1,085.20.[33] The reality is that gold doesn't need to take off from here to underpin local gold stocks. It would be nice for more, but anything more than $US1000 an ounce will do.[38] December gold jumped $10.10 to $1,095 an ounce, after hitting an all-time trading high of $1,096.20 an ounce earlier in the session.[3] January platinum PLF0 finishes up $18.10, or 1.4 percent, at $1,356.20 an ounce, taking the lead from gold.[26]
ASX-listed explorers with a west-African focus are flavour of the month. Its lightly picked over "greenstone" belts have been yielding more multi-million ounce discoveries in recent years than you can poke a stick at. Then there is the issue of the Australian gold sector producing more than its fair share of project failures in the last couple of years, let alone the almost complete absence of decent discoveries.[38] "We feel the RBI could move forward to accumulating more reserves as gold is expected to shine for years to come.[18] RBI may move forward to accumulating more gold as the yellow metal is expected to shine in the years to come, an analyst with a broking firm said.[18]
Instead of turning to gold, Buffett sees Burlington Northern as a growth vehicle to earn more on the billions in cash Berkshire has on its books carrying coal, wheat and other resources across the nation. India, by comparison, is making a direct bullish call on gold, just as China, its major rival in Southeast Asia, did some months ago. [21] Buying gold is seen as a way to hedge against a weaker dollar and the threat of inflation. Gold rose even as the dollar moved higher against other major currencies in early trading, breaking away from its traditional inverse relationship with the U.S. currency.[7] '''I think the price has to correct at least once to the 14k levels despite the long-term story for the metal looking promising.''' A currency trader at a public sector bank said dollar was looking '''bullish''', especially since the S&P 500 had broken its support and equity markets in the U.S. and Europe were falling, which would impact currencies negatively versus the U.S. unit.[20] The U.S. central bank is expected to hold the federal funds rate, a key overnight bank lending rate, at historic lows near 0%.[3] The central bank said that it was an official sector off-market transaction and was executed over a two-week period during October 19-30, 2009 at market-based prices.[10]
The bank said in a statement that the purchase "was done as part of the Reserve Bank's foreign exchange reserves management operations". [13] "The purchase was done as part of the foreign exchange reserves management operations. It was an official sector off-market transaction, executed over a two-week period starting from October 19 at market-based prices," the RBI said in a press release on Tuesday.[16]
China, whose $2.2-trillion in foreign reserves are the world's largest, was widely expected to snap up the bullion. [6]
January platinum PLF0 up $21, or 1.6 percent, at $1,377.20 an ounce, up on encouraging U.S. auto sales.[35] The average price achieved was $275 an ounce -- about a quarter of yesterday's price.[9] December silver soared 74 cents, or 4.5 percent, to $17.18 an ounce, while December platinum rallied $18.10 to $1,353 an ounce.[7] On the Chicago Board of Trade, December wheat futures rose 1 cent to $5.1575 a bushel, while corn for December delivery rose 7.75 cents to $3.09 a bushel.[7] Gasoline futures added 1.01 cent to $2.0004 a gallon, while heating oil futures gained 2.73 cents to $20.733 a gallon.[7]
The U.S. dollar is done! What you are seeing is the nations of the world coming to terms with the future. Wait till China starts dumping her U.S. dollars back in the good ole USA there will be Hyperinflation never seen before in the United States. [12]
'''Indications by the Fed since the last Federal Open Market Committee (FOMC) meet suggest that the zero-interest rates may not be here to stay, given inflationary expectations and that implies a stronger dollar and conversely weaker gold,''' said Gnanasekar Thiagarajan, director of Mumbai-based Commtrendz.[20] Market constituents expect the yellow metal to correct in the short-term on account of a strengthening dollar and falling global markets, where valuations are believed to be stretched and the recovery being attributed to the government'''s cost-cutting stimulus packages rather than an increase of consumption.[20] The precious metal, which is on a rising spree for the last few days backed by seasonal demand and a firming global trend, added another Rs 330 to Rs 16,800 per 10 gram.[30]
Spot platinum XPT= was at $1,355.50, compared with late previous session quote of $1,334 in New York. [26] Spot silver XAG= was at $17.21, versus $16.43 in the previous session in New York.[26]
You might think that Warren Buffett's $34 billion bid for the rest of Burlington Northern Santa Fe ( BNI - news - people ) is the most eye-catching investment decision of the day. [21]
SOURCES
1. AFP: Gold hits record in emerging markets surge
2. PRECIOUS METALS: NY Gold Hits Record High After RBI Purchase - WSJ.com
3. Gold hits a record near $1,100 - Nov. 4, 2009
4. Gold sweeps to record high above $1,080 | U.S. | Reuters
5. Gold closes in on $US1100 an ounce
6. Golden sale heralds economic force - The Globe and Mail
7. The Associated Press: India's gold buying pushes metal to new high
8. IMF makes golden sale - The Globe and Mail
9. Gold prices hit new high on Indian deal with IMF - Times Online
10. RBI buys 200 mt gold from IMF to pump up reserves' value- Bullion-Markets-The Economic Times
11. India's $6.7bn taste for gold sends price soaring - Times Online
12. Gold sweeps to record above US$1,080
13. AFP: India still likes dollars despite buying gold: minister
14. fullstory
15. Gold hits new high after India's central bank loads up | Money & Company | Los Angeles Times
16. The Hindu Business Line : RBI buys 200 tonnes of gold from IMF
17. No big deal!- Editorial-Opinion-The Economic Times
18. RBI may accumulate more gold to protect against a weak dollar- Forex-Markets-The Economic Times
19. India goes bullish on gold, sees a dim dollar future: Forbes- Forex-Markets-The Economic Times
20. Yellow metal trades at a record high - Bullion-Markets-The Economic Times
21. Buffett And India See A Dim Dollar Future - Forbes.com
22. The Associated Press: India's gold buying pushes metal to new high
23. Gold hits record on Indian purchase - ABC News (Australian Broadcasting Corporation)
24. Quick Edit | The return of gold - Home - livemint.com
25. Gold rushes to record high above $1,090/oz - Forbes.com
26. US gold hits record high $1,088.50/oz on IMF sale | Currencies | Reuters
27. Gold Extends Run to Record Highs - WSJ.com
28. UPDATE: PRECIOUS METALS: Comex Dec. Gold Extends Record High - WSJ.com
29. India propels gold to new high
30. fullstory
31. UPDATE: Spot Gold At Record High As Bull Run Gathers Speed - WSJ.com
32. Gold Prices Reach Record: Why $1,100 Might Be Next Stop. - MarketBeat - WSJ
33. Gold surges to an all-time high - Nov. 3, 2009
34. BBC NEWS | Business | Gold hits new high on India deal
35. US gold hits fresh record highs on dollar weakness | Currencies | Reuters
36. TIMELINE - Gold bags new all-time high, continuing meteoric rise | Business News | Reuters
37. The Ticker - Gold blows through record highs, closes in on $1,100 per ounce - Economy Watch
38. Barry FitzGerald | Garimpeiro | Gold market shines as Indian bulls buy bullion
39. fullstory
40. UPDATE: Spot Gold Hits New All-Time High Of $1,081.05/oz - WSJ.com
41. Keep up the stimulus, but devise credible exit strategies: IMF- Indicators-Economy-News-The Economic Times
42. Debt next challenge for world economies: IMF
43. Debt high, too early to adjust fiscal policies-IMF - Forbes.com
44. Mauritius should hold lending rate, eyes stronger 2010 GDP: IMF | Reuters
45. Spot Gold At New High Above $1,089/Oz; Sentiment Bullish - WSJ.com
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