Gold slips from record high, but $1,100 still in sight

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Tokyo: Spot gold inched lower on Thursday but remained within striking distance of $1,100 an ounce after hitting an all-time high for the second straight session on a weak dollar the previous day.

News this week of Reserve Bank of India’s (RBI) purchase of 200 tonne of gold from the International Monetary Fund (IMF) has also given gold the momentum to climb back towards $1,100 per ounce.

That transaction represents about half of a long-planned IMF bullion sale, and the industry is now wondering who will be buying the rest of the IMF gold.

The governor of the Bank of Thailand told Reuters on Thursday that there had no plans to buy gold from the IMF. He added that the bank does not expect official interest rates to rise this year because there are still risks to the economic recovery.

The dollar remains under pressure after falling on Wednesday after the US Federal Reserve reiterated its commitment to keep interest rates low for an extended period.

Akira Doi, a managing director at Tokyo’s Daiichi Commodities Co Ltd, said gold could fall on profit-taking this month after it eventually hits $1,100.

Funds close their books in November, and one should keep in mind they may decide to pocket profits and sell this month, he said.

Noncommercial net long positions in US gold futures remained near a record.

He added, however, that gold was likely to remain above $1,000 even if it is hit by profit-taking, noting that India’s purchase from the IMF was made near an average of about $1,045 an ounce.

I think that fact will have a psychological impact on the market ... there is no longer any surprise in seeing a four-figure price for gold, Doi said.

Bullion also remains attractive as an alternative investment.

There is also the persistent worry about the economy to support gold, said Shuji Sugata, a manager at Mitsubishi Corp Futures Ltd.

Spot gold was at $1,088.45 an ounce at 0540 GMT, down 0.4% from New York’s notional close of $1,092.35. It rose to an all-time high of $1,097.25 on Wednesday.

US gold futures for December delivery were at $1,089.20 an ounce, up 0.2%.

Futures hit a record $1,098.50 on Wednesday.

The world’s largest gold-backed exchange-traded fund, SPDR Gold Trust, said its holdings stood at 1,108.399 tonne as of Nov. 4, unchanged from the previous business day.