Gold prices hit all-time high

Gold prices hit all-time high

Gold prices surged to a record high Tuesday after the International Monetary Fund said it had sold 200 metric tons of the precious metal to India’s central bank, CNNMoney reported.

November gold rose $30.90 to settle at $1,084.90 an ounce, after climbing to a high of $1,085.20. The previous intraday record was set Oct. 13, when gold rose to $1,069.70 an ounce.

The IMF said Monday that it had sold 200 metric tons of gold to the Reserve Bank of India for $6.7 billion. 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.

"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. 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.

The rally came despite a slightly stronger U.S. dollar. The dollar index, which measures the dollar’s value against a basket of currencies, rose to a one-month high earlier Tuesday.

Gold and other commodities that are priced in dollars often fall when the greenback strengthens. But demand for gold remained firm Tuesday as investors focused on the IMF sale.