Gold swept to a record high above $1,080 per 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. Spot gold stood at $1,077.15 per ounce at 1645 GMT, up 1.7 percent from $1,059.15 quoted late in New York on Monday. Earlier, gold hit a historic high of $1,080.60.
US gold futures also hit a record $1,081.70 an ounce. The IMF said on Monday it had sold 200 tonnes of gold to India for $6.7 billion. 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. 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. 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. On the physical investment side, the picture still looked subdued. The world's largest gold-backed exchange-traded fund, SPDR Gold Trust, said its holdings stood at 1,103.519 tonnes as of November 2, unchanged from the previous business day.
Other precious metals rallied in gold's wake, with silver adding 2.8 percent to $16.90 an ounce, against $16.43 an ounce late on Monday. Silver has also been boosted by a pick-up in industrial demand. The metal is primarily industrial in application, and is widely used in electronics manufacturing. Platinum rose to $1,340.50 an ounce compared with $1,334.00, while palladium was at $323.00 against $321.50.