Gold Price Hits Record After 'Sri Lanka Purchase'

Source:

"IMF was 'lucky' in selling the 200 tons to India for roughly $1,045/oz."

The price of gold hit a record high above 1,100 dollars an ounce in trading here on Friday following a report that Sri Lanka had joined India in purchasing the precious metal in favour of the U.S. currency.

"The Central Bank of Sri Lanka has announced that it is buying gold to diversify its reserves," industry body the World Gold Council (WGC) said in a statement issued before gold struck a record high of $1,101.42 dollars.

It later pulled back to stand at $1,092.65 dollars an ounce in late London trading.

Gold had struck a series of highs already this week after the IMF said it had carried out a massive sale of the precious metal to India.

"Over the past year central banks, which have been net sellers of gold are now a new and increasingly important source of demand," WGC chief executive Aram Shishmanian said in the council's statement.

"This latest announcement demonstrates that many central banks are reassessing their reserve asset management policies."

Gold had reached a record high of $1,087.80 dollars on Tuesday as the IMF said it had sold 200 tons of gold to India's central bank over a two-week period last month for 6.7 billion dollars to bolster its finances.

A senior IMF official said that the IMF was "lucky" in selling the 200 tonnes to India for roughly 1,045 dollars an ounce, compared with 850 dollars an ounce in April 2008.

Gold's price, which has risen more than 20 percent this year, has a bright future thanks to improving demand caused by the financial crisis, industry experts said this week.

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