NEW YORK/LONDON — Gold prices hit record highs above US$1,190 an ounce Wednesday as the dollar fell sharply and the market expected central banks from emerging economies to keep buying bullion from the International Monetary Fund.
Gold prices have risen nearly 15% since the beginning of November, on a combination of central bank interest to diversify into the metal, a steadily falling U.S. dollar and inflation worries.
Late on Wednesday, the IMF said it had sold 10 tons of gold to the Central Bank of Sri Lanka.
“We have had relatively supportive news from the central banks, particularly in Asia, confirming that there is demand for gold as a means of diversifying their large foreign exchange reserves,” RBS Global Banking & Markets analyst Daniel Major said.
“There is plenty more potential for central banks to buy either IMF gold or other gold in the market to try and boost their reserves,” he added.
Investor sentiment was bullish, highlighted by the news that the U.S. Mint said it was suspending sales of the popular American Eagle one-ounce gold bullion coins due to strong demand…MORE…
