Wednesday, November 4, 2009

Gold Price Reaches a New High Following IMF Decision to Sell Gold to India

Prices of Gold and other precious commodities have been increased with investors becoming increasingly reluctant to US dollars. However, gold price has reached an all-time high recently following IMF’s decision to sell 200 tonnes of gold to India. India has comparatively little gold compared to their huge foreign exchange reserve. IMF would sell further 200 tonnes of gold over the next few years, but it is not yet clear who would be the buyer.

BBC reported:

"The question now is, who buys the rest of the IMF gold?" Bart Melek at BMO Capital Markets said in a note to clients.

"We suspect it may be China, other Asian countries, Russia or even India again, as they hold relatively little gold relative to their very large foreign exchange reserves, and may want to diversify away from US dollars."

It is pretty much naturally that gold price would increase because October-December is the festival season in most part of the world due to Christmas and in India because of Diwali festival. Now, let us see if it the gold price would come down in the coming weeks.

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