Mauritius buys 2 tons of gold from IMF

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Mauritius followed India buying gold from the International Monetary Fund, prompting renewed speculation that other central banks will bolster their holdings as the precious metal trades near a record and the dollar slumps.

The Bank of Mauritius bought 2 metric tons for about $71.7 million, said the Washington-based agency, which plans to sell a total of 403.3 tons to shore up its finances. The Reserve Bank of India paid $6.7 billion for 200 tons earlier this month.

Gold has surged 29 percent this year as the dollar declines and investors seek to protect their wealth. Evy Hambro, who helps to manage BlackRock Investment Management Ltd.'s $11.6 billion World Mining Fund, said yesterday there will be renewed interest in gold from holders of reserves.

The purchase is "another signal that emerging-market central banks are looking to increase their foreign-exchange allocation in gold," said Shane Oliver, head of investment strategy at AMP Capital Investors Ltd. Calls by Bloomberg News to Mauritius’s central bank went unanswered this morning.

Gold for immediate delivery, headed for a ninth annual gain, touched an all-time high of $1,143.60 an ounce yesterday. The metal, which traded at $1,137.54 at 10:48 a.m. in Singapore, had become the "ultimate currency," Gijsbert Groenewegen, a partner at Gold Arrow Capital Management in New York, said yesterday.

The sale to Mauritius was based on market prices on Nov. 11, the IMF said in an e-mailed statement yesterday. Spot gold traded between $1,105.66 and $1,118.88 an ounce that day, according to Bloomberg data. The IMF has said it is ready to sell directly to central banks and later make transactions on the open market if necessary.

"There are a lot of uncertainties in the U.S. dollar and not much confidence in other currencies either," AMP Capital Investors's Oliver said from Sydney. "Gold is a viable option."

The Dollar Index, a six-currency gauge of the dollar’s value, was little changed today near a 15-month low.

Asian nations, which have amassed stockpiles of foreign currency reserves since the 1998 financial crisis, have shown increased interest in diversifying out of U.S. assets.

The Federal Reserve has cut borrowing costs to an all-time low while the U.S. government boosted spending to a record to combat recession in the world’s biggest economy, fueling speculation that the currency will be debased.

China, the biggest gold producer, has increased gold reserves 76 percent to 1,054 tons since 2003 and has the fifth-biggest holdings by country, Hu Xiaolian, head of the State Administration of Foreign Exchange, said in April.

The world's most populous nation may buy some of the 403.3 tons being offered by the IMF, Market News International said in September, citing two unidentified government officials.