A REPORT that India may buy more gold from the International Monetary Fund (IMF) thrust the prices of the metal to a new high yesterday.

The Financial Chronicle newspaper said India may buy more gold from the IMF following the country's purchase of 200 tonnes earlier this month.

Gold for immediate delivery added as much as S$14.90, or 0.9 per cent, to S$1,633 an ounce and traded at S$1,630 by 9.53am in London.

But India's central-bank governor, Mr Duvvuri Subbarao, declined to comment on whether the bank would buy more gold from overseas.

The paper said that, subject to acceptable conditions, India's central bank could well buy the balance of the initial 403.3 tonnes - one eighth of the IMF's total gold holdings - that the Fund had planned to sell.

Bullion futures for February delivery on the New York Mercantile Exchange's Comex division climbed 1 per cent to S$1,631.90 an ounce, after earlier reaching S$1,635.

Up for a ninth day, futures are set for the longest stretch of gains since August 1982.

The report quoted an unnamed government official as saying that the additional purchase would depend on successful pitching by the Reserve Bank of India, the country's central bank.

"The actions from the central banks are a very important factor at the moment," said Mr Eugen Weinberg, analyst at Commerzbank AG. "The purchase from India was like a seal of the prices above S$1,384 an ounce. Also, other central banks are buying gold."

Spot gold has jumped nearly 13 per cent since the beginning of this month, as investors flocked to the metal after India's central bank announced that it had bought 200 tonnes of bullion from the IMF, in the first such sale by the Fund since the year 2000.

Russia, Sri Lanka and Mauritius have followed suit.

Although India is the world's biggest consumer of gold, primarily in the form of jewellery and investment among its billion-plus population, its central bank had given little sign of being a frontrunner in the move to diversify into bullion.

A second purchase would lift India's share of gold holdings to an estimated 8 per cent or so, much less than those of most of the developed world but four times China's share.

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