Tokyo - Gold was firm on Wednesday, consolidating this week's gains to record highs as the precious metal looked poised to scale new peaks on the back of a weak dollar.
Bullion remained in sight of a record high of $1 110.85 an ounce marked on Monday, and the dollar's persistent weakness on expectations that US interest rates will likely stay low is expected to help gold rise further.
"The market's probably in a bit of a consolidation mode and traders are cautious moving forward," said Adrian Koh, an analyst at Phillip Futures in Singapore.
"The gold upward momentum is still strong and there aren't any sell signals yet," he said.
India's recent purchase of 200 tonnes of gold from the International Monetary Fund has also provided gold with support as it has kept the metal out of the market.
The question has now shifted to how and when the IMF will execute the transaction for the remaining planned gold sales.
A former senior foreign exchange official in China, which was seen by some as the most likely buyer of IMF's gold, said this week that the country should not rush to buy the metal from the IMF but should wait for the price to drop from a record.
In widely watched news, Chinese industrial output growth jumped to a 19-month high in the year to October, underlining the economy's brisk recovery from the global downturn in response to massive fiscal and monetary stimulus.
Spot gold was at $1 106.20 per ounce at 03:36 GMT Tuesday, up 0.1% from New York's notional close.
US gold futures for December delivery were at $1 106.60 an ounce, up 0.4%, after hitting an all-time high of $1 111.70 on Monday.
The dollar slipped on Wednesday, but managed to avoid a break of recent 15-month lows against a basket of currencies as investors paused for breath after a recent spike in the euro and higher-yielders.
"The only factor that may weigh on gold would be a rebound in the dollar, or any profit-taking pressures. But, we aren't really getting any clear signs of that yet," Koh said.
World Bank President Robert Zoellick said on Wednesday that the dollar's role as a reserve currency is intact, but the United States cannot take it for granted and needs to tackle its huge fiscal deficit.
The world's largest gold-backed exchange-traded fund, SPDR Gold Trust, said its holdings stood at 1 114.443 tonnes as of November 10, unchanged from the previous business day and at a level last seen in July.
US investment bank Goldman Sachs said gold could rise to record highs in a range from $1 150 to $1 200 an ounce, driven by declining real interest rates and renewed buying interest by central banks.
Spot silver was at $17.31 per ounce, mostly flat from the New York notional close of $17.32.
Spot platinum was at $1 356.50 per ounce, up from $1 349.50, while sister metal palladium was at $331.00 versus $331.50.
- Reuters