The gold market exploded even higher today on the news that Reserve Bank of India (RBI) is in talks with the International Monetary Fund to purchase the rest of the 400 tons that were made available for purchase of this latest round of gold bullion sales.
At the time of this writing, the price of gold is at $1,191.00 per ounce. At the same time, the U.S. Dollar weaken by 1.05% bring it to 74.249 on a currency weighted basis. Today is a short trading week and light session so it is too soon to know if they is a real move.
India is open to buying more gold from the International Monetary Fund(IMF). It bought 200 tonnes for $6.7 billion on November 3. The Reserve Bank of India (RBI) may well buy IMF’s remaining hoard of 201.3 tonnes on acceptable terms, which are now under negotiation.
A government official said that the additional purchase would depend on the “successful pitching by RBI”. “RBI is an independent body, and the government does not interfere in its affairs. It will get the gold if its bid is successful and at the price it has offered,” said the official.
Analysis: Too soon to tell but it looks like gold is being “remonetized” as a international money and asset class. If that is so then it does not bode well for the U.S. dollar as the “sole” reserve currency and if that is to be prevented then a major reform of the currency is needed.