By Kim Kyoungwha Nov. 17 (Bloomberg) -- Gold, little changed, may climb to a record for a second day as investors boost holdings to protect their wealth against a declining dollar and inflation. Bullion may also extend its advance beyond yesterday’s high of $1,143.60 an ounce after the central bank of Mauritius bought 2 metric tons, or about $71.7 million, of gold from the International Monetary Fund, a move that may be followed by other emerging-market nations trying to diversify their currency reserves. The dollar traded near a 15-month low after Federal Reserve Chairman Ben S. Bernanke said economic “headwinds” may restrain the pace of U.S. recovery, warranting low borrowing costs for an “extended period.” “There is little prospect of the gold juggernaut derailing and higher prices are inevitable,” said Gavin Wendt, resource analyst with Mine Life Pty in Sydney. The rally is “assisted by traditionally strong seasonal demand and existing investor buying driven by risk aversion.” Gold for immediate delivery traded at $1,137.36 an ounce as of 10:11 a.m. in Singapore after closing at $1,139.20 yesterday. Gold futures for December delivery traded at $1,137.90 an ounce on the New York Mercantile Exchange’s Comex division after climbing to a record $1,144.20 yesterday. The Dollar Index, which the IntercontinentalExchange Inc. uses to track the greenback’s value against six major currencies including the euro and the yen, closed down 0.6 percent at 74.894 in New York yesterday after touching 74.679, the lowest level since August 2008. It traded at 74.931 today. IMF Sale The Federal Reserve has cut its main interest rate almost to zero and backed asset purchases and credit programs to combat the recession. Bernanke is leading plans to buy mortgage-backed securities, federal agency debt and Treasuries. The gold transaction is part of a plan by the IMF to sell 403.3 tons of the precious metal to shore up its finances and lend at reduced rates to low-income countries, the Washington- based agency said in an e-mailed statement. It comes after the purchase of 200 tons for $6.7 billion by the Reserve Bank of India earlier this month. “That’s another signal that emerging market central banks are looking to increase their foreign exchange allocation in gold,” said Shane Oliver, head of investment strategy with AMP Capital Investors Ltd. in Sydney. “There are a lot of uncertainties in the U.S. dollar and not much confidence in other currencies either. Gold is seen as a perfect store of value.” The IMF has said it is ready to sell directly to central banks and later make transactions on the open market if necessary. It repeated in the statement that it will “inform markets before any on-market sales commence.” Asian nations, which have amassed stockpiles of foreign currency reserves since the 1998 financial crisis, have shown increased interest in diversifying out of U.S. assets as the dollar loses value against other currencies. Among other precious metals for immediate delivery, platinum was little changed at $1,442 an ounce and silver fell 0.5 percent to $18.2950 an ounce. Palladium was little changed at $375 an ounce. To contact the reporter on this story: Kyoungwha Kim in Singapore at Kkim19@bloomberg.net

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