GOLD READY TO HIT HISTORIC HIGHS

       Despite the news that the International Monetary Fund would sell more than 400 metric tonnes of gold, local fund managers believe global gold prices could still stand above US$1,000 an ounce and would soon rise to a new historic high.
       Gold prices yesterday declined to under US$1,000 an ounce for the first time since September 15.
       They said several central banks have reduced exposure to the US dollar as a reserve currency, while more institutional investors have shifted more of their portfolios to gold.
       Yesterday, gold declined, further cooling a rally that sent prices above $1,000 an ounce this month, after the IMF approved bullion sales and as a rebound by the dollar curbed demand for an inflation hedge, according to Bloomberg.
       The IMF's executive board approved sales of 403.3 metric tonnes valued at about $13 billion (Bt445 billion), pledging to avoid disrupting the market with the transactions and saying it would "stand ready to sell gold directly to central banks".
       "I don't think it will affect the market too much," Jonathan Barratt, managing director at Commodity Broking Services, said on Monday. "It will either go to central banks or they might actually auction it off."
       Morgan Stanley also said the IMF's approval to sell gold is not a "material threat to current prices" and kept its 2010 gold forecast at $1,000 an ounce, according to an emailed report yesterday.
       Immediatedelivery bullion yesterday lost as much as $11.63, or 1.2 per cent, to $995.97 an ounce and traded at $1,000.20 by midmorning. The metal, which fell below $1,000 for the first time since September 15, added 0.2 per cent last week, a fifth gain.
       The US Dollar Index, a gauge of the greenback against six major currencies, extended gains, climbing as much as 0.2 per cent. Some traders buy gold to preserve purchasing power when the US currency weakens. On Friday, gold prices in New York were at US$1,010.3 an ounce.
       For the domestic market, gold bar prices early yesterday were quoted at Bt15,900 per baht weight for buying and Bt16,000 for selling, while gold ornaments were quoted at Bt15,675.44 for buying and Bt16,400 for selling.
       Gold bar prices were at 2:40pm changed to Bt15,850 for buying and Bt15,950 for selling, while gold ornament prices were changed to Bt15,614.80 for buying and Bt16,350 for selling.
       Gold has jumped 14 per cent so far this year on speculation that inflation will accelerate as the US economy emerges from the worst recession since the Great Depression. The precious metal rose 0.2 per cent last week, the fifth straight weekly gain and the longest streak since November 2007.
       Bullion has jumped around 30 per cent since the collapse of Lehman Brothers last year.
       Paisarn Krutdamrongchai, a senior executive of TMB Asset Management, pointed out that global gold prices still stand above $1,000 as several institutional investors have reduced their holdings of US treasuries, as they believe the US dollar would weaken. And they have turned to investing more via gold funds to diversify risks.
       Prapas Tonpibulsak, CEO of Ayudhya Fund Management, believes global gold prices could set a new peak above the record high reached last year at $1,034 an ounce.
       Most institutional investors and central banks view the US dollar as depreciating further, so several central banks have reduced their US dollar holdings.
       Fund managers have also shifted their funds away from US treasuries, which are likely to provide skimpier returns than commodities and gold.
       The stock market rally over the past year has made some riskaverse investors shift to bullion.
       Jitti Tangsithpakdi, president of the Gold Traders Association, said the news report of the IMF selling gold, which would curb the global gold rally, is only a report with no grounds.
       He said the IMF's gold sale needs approval from the US Congress and more than 100 member countries. The IMF is also under a sales quota of not more than 500 metric tonnes of gold per year.
       "I can tell you that this is only a news report released by speculators. I believe that gold will reach its new high within a short period," he said.