LONDON - THE price of gold leapt to a record peak of US$1,093.10 (S$1,527) an ounce in trading here on Wednesday in the wake of the International Monetary Fund's massive sale of the precious metal to India.

Gold had already reached a record high of US$1,087.80 on Tuesday as the IMF said it had sold 200 tonnes of gold to India's central bank over a two-week period last month for US$6.7 billion to bolster its finances.

After spiking to a new high on Wednesday, gold pulled back slightly to stand at US$1,091 in London morning trade.

Gold and other commodity prices have surged in recent months amid a move away from the dollar, which has been slumping. The move accelerated last month on a report that Gulf states may stop using the greenback for oil trading. The metal is also winning support from fears over a possible spike in inflation, as gold is widely regarded by investors as a safe store of value.

Mr Bart Melek at BMO Capital Markets said the big sale of gold to India gives credence to the theory 'that there are official buyers waiting in the wings for large amounts of available gold.'

The sale to India was nearly half the 403.3 tonnes of gold that the IMF has targeted for sale over the coming years. The Washington-based IMF, which currently holds 3,217 tonnes of gold, is the third-largest official holder of the precious metal after the United States and Germany. -- AFP