Mauritius buys IMF gold, follows India as metal soars

The US$71.7 million sale to the Bank of Mauritius was based on market prices on Nov. 11, the IMF said in an e-mailed statement Monday. The Reserve Bank of India paid US$6.7 billion for 200 tons from the IMF, according to a Nov. 2 statement.

Gold has surged this year as the U.S. currency declines and investors seek to protect their wealth.

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.

“Investors at different levels feel more comfortable” with some gold in their portfolio, said Albert Cheng, Far East managing director at the World Gold Council. Mauritius held 1.9 tons, equal to 3.2 percent of the republic's reserves, as of September, according to data from the producer-funded group.

Gold for immediate delivery is headed for a ninth annual gain and touched an all-time high of US$1,143.60 an ounce Monday. The metal, at US$1,136.55 at 1:30 p.m. in Singapore, is the “ultimate currency,” Gijsbert Groenewegen, a partner at Gold Arrow Capital Management in New York, said Monday.

The Mauritian purchase is “another signal that emerging- market central banks are looking to increase their foreign- exchange allocation in gold,” Shane Oliver, head of investment strategy at AMP Capital Investors Ltd., said from Sydney.

Calls by Bloomberg News to Mauritius's central bank went unanswered outside normal business hours this morning.

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

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

The IMF sale forms part of a plan to sell a total of 403.3 tons to shore up the bank's finances and increase lending to low-income nations.

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