RBI buys 200 tons of gold from IMF

The International Monetary Fund (IMF) said that it sold 200 tons of gold to the Reserve Bank of India (RBI) for US$6.8bn. Traders had expected China to be the leading contender. The sale was concluded at an average price of about US$1,045 an ounce over a two-week period in the latter half of October. "This transaction is an important step toward achieving the objectives of the IMF's limited gold sales program, which are to help put the fund's finances on a sound long-term footing and enable us to step up much-needed concessional lending to the poorest countries," the IMF's Managing Director, Dominique Strauss-Kahn, said in a statement. Traders said that the IMF news could add to recent gains in the precious metal.

India's foreign exchange reserves held at the central bank totaled US$285.5bn on Oct. 23, of which gold comprised more than US$10bn. The RBI paid on average about US$1,045 an ounce for the gold and the transaction would be paid in hard currency and not in IMF Special Drawing Rights.

The IMF declined to say whether other central banks have expressed interest in buying the remaining 203.3 tons of gold on tap for sale. Strauss-Kahn said if no other central banks came forward, the IMF would proceed as planned to sell the gold in the market. It was the first time since 2000 that the IMF sold gold to a central bank. Between December 1999 and April 2000 in separate transactions, the IMF sold a total of 12.9 million ounces of gold to member countries Brazil and Mexico.