* India's cenbank may consider more gold buys-report
* Dollar slips lower versus currency basket
* Silver ETF holdings hit record in London, New York
(Updates throughout, changes dateline from TOKYO)
By Jan Harvey
LONDON, Nov 25 (Reuters) - Gold prices hit record highs at
$1,180.00 an ounce in Europe on Wednesday, boosted by a report
that India may consider buying more bullion from the
International Monetary Fund, and the weaker dollar.
Spot gold <XAU=> was bid at $1,178.30 an ounce at 1022 GMT,
against $1,168.90 late in New York on Tuesday.
U.S. gold futures for December delivery <GCZ9> on the COMEX
division of the New York Mercantile Exchange also hit a record
$1,180.40 an ounce and were later up $12.80 to $1,178.60.
India's Financial Chronicle newspaper said on Wednesday that
India is open to buying more gold from the IMF, which is thought
to have around another 200 tonnes to sell.
"This, and the weaker U.S. dollar, are enough in these
markets to push gold further up," said Commerzbank trader
Michael Kempinski. "It should be time for a consolidation, but
it doesn't come... (we are) just making new highs."
"We see $1,200 earlier than expected," he added.
The market is sensitive to speculation of further official
sector buying after news in early November that India's central
bank had bought 200 tonnes of gold from the IMF sparked a rally.
Russia, Sri Lanka and Mauritius have since also announced
gold acquisitions, and traders speculate that more central
banks, particularly in Asia, could be open to gold acquisitions
to diversify their foreign exchange reserves.
"We have had relatively supportive news from the central
banks, particularly in Asia, confirming that there is demand for
gold as a means of diversifying their large foreign exchange
reserves," RBS Global Banking & Markets analyst Daniel Major
said.
"There is plenty more potential for central banks to buy
either IMF gold or other gold in the market to try and boost
their reserves."
FURTHER GAINS EXPECTED
Expectations for further reserve diversification, as well as
prospects for further dollar weakness and fears over inflation
in 2010 have all fuelled investment demand for the precious
metal, and could lead to further sharp prices gains.
"Central bank and other investor demand could see gold move
to $1,500/oz in the next 3-6 months," said Fairfax in a note.
Weakness in the dollar remains a major support of the gold
market, with the U.S. currency dropping 0.49 percent against a
basket of six others on Wednesday. []
Traders cited several factors contributing to the dollar's
fall, including talk of a large fund selling, rebalancing of the
MSCI Japan share index favouring the yen, and the prospect of
low U.S. rates after Federal Reserve meeting minutes.
Dollar weakness helped lift other commodities, with oil
prices ticking up half a percent and industrial metals prices
climbing. [] []
Elsewhere, holdings of the world's largest gold
exchange-traded fund, the SPDR Gold Trust <GLD>, rose nearly 1
tonne on Tuesday to their highest since late June. []
Indian gold traders meanwhile continued to stock up for
weddings in anticipation of a further price rise, but the flow
of scrap sales eased. []
Silver <XAG=> was bid at $18.59 an ounce versus $18.49.
Holdings of the world's main silver ETF rose 136 tonnes to a
record 9,252 tonnes on Tuesday, while ETF Securities' silver
exchange-traded product also hit record levels. []
Platinum <XPT=> was at $1,464.50 an ounce against $1,444.50,
while palladium <XPD=> was at $372 against $366.35. Holdings of
ETF Securities' palladium-backed ETP rose to a record 620,359
ounces on Tuesday, and are up 11 percent month-on-month.
(Editing by James Jukwey)
((jan.harvey@thomsonreuters.com; +44 207 542 7744; Reuters
Messaging: jan.harvey.reuters.com@reuters.net))
