Gold continued is impressive run on Wednesday crashing the 11,000 barrier before retreating to closed at 10, 086.70 after India’s central bank bought 200 tons of the shiny stuff worth $6.7 billion and it’s head saying the US and European markets “collapsed”
The news show Asian markets are quickly moving away from the US dollar.
The purchase by the New Delhi Reserve Bank form the International Monetary Fund may spur other Central banks across Asia to join India to buy gold and drop the dollar.
Inida’s Finance Minister Pranab Mukherjee says the purchase by India show how strong the Indian economy compared to the west. “We have money to buy gold. We have enough foreign exchange reserves.”
Mukerjee points out India’s strength versus west. “Europe collapsed and North America collapsed.”
“This is a landmark trade,” said Jonathan Spall a director at Barclays Capital and a gold specialist. “Central banks are conservative institutions and India’s move is a sign for other central banks and sovereign wealth funds that were contemplating buying gold.”
India gold purchases come after the People’s Republic of China bought their fail share of golden commodity over the last six years.
Traders and miners believed that China and Middle East soverigen wealth funds will buy more gold.