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Wednesday, November 4, 2009

Gold price tops $1,090 an ounce for first time

4 Nov 2009

LONDON: The price of gold leapt to a record peak of $1,093.10 an ounce in trading here on Wednesday, a day after the International Monetary Fund announced a massive sale of the metal to India.

In India, gold futures struck a fresh record high of Rs 16,664 per 10 grams on Wednesday afternoon. At 2:16, gold futures on the Multi Commodity Exchange (MCX) traded 0.17 percent higher at Rs 16,646 per 10 grams, off its record high.

Analysts said a weaker dollar could push prices to $1,100 an ounce. "The recent run on gold was extremely strong," Eugen Weinberg, a commodity analyst at Commerzbank said. "Most of the action will probably be this afternoon ... today the gold price should also get some support from the weaker dollar."

Gold swept to a record high at $1,087.45 an ounce on Tuesday as the IMF's 200-tonne sale of gold to India underscored gold's increasing status as an official reserve and fuelled speculation that other governments may be ready to diversify their reserves.

The recent surge was also reflected in investment flows. The world's largest gold-backed exchange-traded fund, SPDR Gold Trust, said its holdings rose to 1,108.399 tonnes as of Nov. 3, up 4.88 tonnes or 0.4 percent from the previous business day.

"It's not surprising that the gold price is holding at the high levels where it is trading now," said Weinberg.

On the economic calendar, markets expects the two-day US Federal Reserve meeting to leave rates unchanged but will look for clues on future rate and monetary policies.

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