GOLD moved and remained above the key US$1,100 an ounce level today after ministers at the weekend's G20
meeting pledged to maintain their fiscal stimulus measures. The precious yellow metal was trading US$9.55 an ounce higher at US$1,106.55 an ounce after touching a new high of US$1,108.55. James Moore of the BullionDesk said gold made a brief test above US$1,100 an ounce on Friday and re-established itself above the psychological level again on Monday morning.
"To restore the global economy and financial system to health, we agreed to maintain support for the recovery until it is assured, boosting risk appetite," states the G20 communiqué. The stimulus news pressured the dollar, which weakened against the euro thereby boosting the precious yellow metal's appeal as an alternative asset. Persistent weakness in the US currency has seen it lose 6% against the euro so far this year. This has helped push gold up by more than 25% this year alone. After last week's 200 tonne gold purchase by the Reserve Bank of India, there are also growing expectations that more central banks might look to buy gold to diversify their reserves.
A Financial Times report said that the Sri Lankan central bank had also been buying gold to diversify its currency reserves following unwanted volatility in the forex market. "While the absolute level of these purchases was rather limited at an estimated 5 tonnes, it again confirmed some of the rumors that have been driving gold higher earlier in the week following India's 200 tons gold purchase from the IMF," said Carl Johansson, senior precious metals analyst
at Goldessential.com.
India's purchase of the gold from the International Monetary Fund (IMF) last week is the largest central-bank purchase in at least 30 years and represented nearly half the 403.3 tonnes of gold that the IMF has targeted for sale over the coming years.
