US market drives gold to new record above $1,080 on the back of IMF gold sale

While news of India buyin 200 tonnes of IMF gold failed to ignite Europe or Asian gold markets, the US took the news rather well

GRONINGEN, THE NETHERLANDS - 

US markets pushed the price of spot gold past previous highs set in October to just over $1,080 an ounce on Tuesday morning.  

The sharp move upwards comes on the back of an announcement on Monday that the International Monetary Fund had sold 200 tonnes of gold to the Indian central bank. 

The news failed to ignite gold traders in Asia or Europe but clearly caught the eye of the North American gold market - gold is currently trading at around $1,078 .48 an ounce, below the intraday peak but still comfortably above its previous best of $1,070.40 struck on Oct. 14. 

Perhaps it just took a little while to sink in. Indeed, initial reactions to the news were positive especially because the safe money had been on China to take up the bullion on offer by the IMF. And, many punters took this as a sign that it wasn't just Beijing that was considering diversifying its holdings into assets other than the US dollar. 

As Aaron Smith, Asia head of the $1.65 billion technical trading fund Superfund, told Reuters this morning "Central banks in India and China will be happy to accumulate gold at these levels. I will not be surprised to see even some Southeast Asian banks buying gold 

According to the IMF the sale involved daily sales that were phased over a two week period during October 19-30, with each daily sale conducted at a price set on the basis of market prices prevailing that day. 

The big question now, and the likely main driver of this recent run in the US is, who will be the buyer of the other half of the IMF's gold stash? Especially because it said in a release   "under the Fund's Articles of Agreement, all gold sales must be conducted at prices based on market prices, including direct sales to official holders as in the case of this transaction."

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gold news is markets rate up gold is markets rate up & don by asif.bhatti on November 23 2009, 13:28 Find this comment inappropriate? Report it

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