Barrick Gold Corporation

Gold Advances to Record as Central Bank Purchases Boost Demand

Nov. 18 (Bloomberg) -- Gold climbed to a record for a second day this week on speculation that central banks and investors will boost holdings to guard against a further decline in the dollar and the threat of rising inflation.

The International Monetary Fund said this week it sold 2 metric tons of gold, valued at about $71.7 million, to Mauritius. The sale followed India’s $6.7 billion purchase of 200 tons, which was announced earlier this month. The IMF plans to sell a total of 403.3 tons to bolster its finances.... See More

“Sentiment continues to be very upbeat,” said Stefan Graber, an analyst with Credit Suisse Group in Singapore. “We are likely to see more central banks stepping up gold purchases. Gold prices could extend their rally into yearend.”

Gold for immediate delivery rose as much as 0.3 percent to $1,144.42 an ounce, and traded little changed at $1,139.43 at 10:34 a.m. in Singapore. Futures also touched an all-time high. Bullion has gained 29 percent this year as record-low interest rates and rising U.S. government spending drove the dollar down.

“It won’t be a surprise that we see $1,200,” said Aaron Smith, managing director at Superfund Financial Singapore Pte. “There could be a pullback, investors shouldn’t be nervous about that. Long-term investors should hold.”

The rally has pushed gold’s 14-day relative-strength index to more than 70, a level regarded by some investors and technical analysts as signaling a decline. Today’s reading for immediate-delivery gold is 74, and the measure has been at more than 70 for four straight days.

Dollar Index

The Dollar Index, which tracks the dollar against six major currencies and has lost 7.4 percent this year, was little changed at 75.244 after rising 0.6 percent yesterday.

European Central Bank President Jean-Claude Trichet said yesterday a strong dollar is in the world’s best interests. The comments came after a Bank of England policy maker said Britain risks inflation if it keeps stimulus spending in place too long.

Silver held in ETF Securities Ltd.’s exchange-traded products increased 0.7 percent to a record 22.506 million ounces on Nov. 16, according to the company’s Web site. Palladium holdings rose 1.7 percent to a record 591,372 ounces and gold assets increased 0.3 percent to 7.992 million ounces.

Gold for December delivery rose to a record $1,144.70 an ounce on the New York Mercantile Exchange’s Comex division, before trading at $1,139.80. Silver gained as much as 0.4 percent to $18.505 an ounce, the highest level since July 16, 2008, and traded at $18.445. Platinum fell 0.5 percent to $1,447.75 an ounce and palladium was unchanged at $372.75 an ounce.