By Michael Hewson
Tuesday 03 Nov 2009 LONDON (SHARECAST) – Gold has continued to make gains today, despite a rally in the US dollar index…

Today’s news that India had bought 200 tonnes of a potential 403.3 tonnes of Gold from the IMF was also seized upon by the market.

The purchases took place in the 2 weeks preceding 30th October when Gold was trading in its range between $1,030 and $1,070.

This move by India seems to support the speculation that countries are diversifying away from currencies as part of their reserves.

It has already been speculated that China may also be doing the same thing…

[source]

RS Comment: It’s a sign of the times that the author was compelled to soft-pedal the FACT of central bank reserve diversification as a mere unconfirmed notion — “speculation”. A more open proclamation would put the gold price off to the races as there is not enough physical metal being offered to meet demand.

In fact, of the Central Bank Gold Agreement’s 400 tonne annual cap potentially to be made available from the combined coffers of the IMF and the European CB signatories, over HALF of it has already been snapped up in just this first month of the newest ‘fiscal year’ of the agreement (which runs from September 27th.) Meaning, the private supply of physical gold upon the free market will continue to be put hard to the test…

R.