Gold soars to lifetime high on weak dollar, reports of India buying more

The price of gold soared to the highest ever on record, riding on a weak dollar and a report suggesting that the Indian central bank may buy more of the precious metal from the International Monetary Fund (IMF).

After breaking all-time high price records this month, gold climbed to a record high of $1,178.70 an ounce today in New York on the back of a weakening dollar and a newspaper report yesterday saying that India was "open to buying" more gold from the International Monetary Fund.

The Financial Chronicle newspaper reported yesterday that The Reserve Bank of India (RBI) is now negotiating with the IMF to buy the remaining 201.3 tonnes from the global lender's hoard if the terms are acceptable.

The Reserve Bank of India Governor Duvvuri Subbarao declined to comment to the media on the report, but a government official told the paper 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.

Gold has risen by 11 per cent since India bought 200 metric tons of gold from the IMF on 3 November for $6.7 billion. (See: RBI buys 200 tonnes of gold from IMF for $6.7 billion)