India-IMF deal to stabilise gold
Gold prices are expected to stabilise with the imminent purchase of gold by India from the International Monetary Fund (IMF).
India's central bank, which has increased its gold holdings to diversify its reserves, looks set to be a buyer again when the IMF begins selling 191.3 tonnes of the precious metal amid volatility in major currencies. Gold prices climbed steadily late last year to touch an all-time high of $1,226.10 an ounce on December 3 after the RBI announced in November it had purchased 200 tonnes of IMF gold.
Prices have steadied just above $1,000 recently, edging up to $1,107.30 an ounce yesterday, after falling one per cent the previous day.
The uncertain outlook for two of the world's major reserve currencies – the dollar and euro – provides a spur for central banks, including India's, to buy gold.
India's gold holdings lag those of major economies despite a big purchase in October.
"India is no stranger to gold. The government is gearing up for growth and wants to recalibrate its reserves," said Mark Pervan, senior commodities analyst at ANZ.
"They can't lift their gold holdings from domestic output, unlike China. And they have shown an appetite to buy in the past."
"We are closely looking at the gold market. We buy at market prices," an RBI official said.
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