Gold hits a record near $1,100

The precious metal continues to push higher one day after India makes a major purchase, raising bets that demand from central banks will rise.

Gold rose to an all-time high Wednesday amid a weaker dollar and speculation that foreign central banks would increase their purchases of the precious metal.

December gold jumped $10.10 to $1,095 an ounce, after hitting an all-time trading high of $1,096.20 an ounce earlier in the session. On Tuesday, gold closed at a record $1,084.90 an ounce.

Gold, which is up 23% this year, surged on Tuesday after the International Monetary Fund said it sold 200 metric tons of the precious metal to India's central bank.

That sale heightened expectations that more overseas central banks will move to increase their gold holdings.


"To have India step in and buy half of the IMF gold was a big surprise," said Joe Foster, a precious metals analyst at Van Eck Global. "It shows that other central banks are looking to buy gold."




Analysts say many monetary policy makers are looking for ways to reduce their exposure to the U.S. dollar, which is the traditional reserve currency of choice for many foreign central banks.

The dollar, which is down 6% this year, has been pressured by concerns about the growing U.S. budget deficit and rock bottom interest rates.

Traders say gold could emerge as the "new dollar" when it comes to reserve currencies.

Ben Rooney CNN Money