Why India bought gold

[rajanlove]

Many analysts were surprised at the speed with which India bought the IMF gold. However, they believe that it is a very smart move as by buying IMF gold, New Delhi is shoring up its bullion reserves and slowly trying to hedge its bets on the US dollar which has been losing value against other currencies.

The RBI paid on average about $1,045 per ounce for the gold and the transaction would be paid in hard currency and not in IMF Special Drawing Rights, the IMF's internal unit of account.

IMF, meanwhile, has not given out any details on whether any other central banks had shown interest in buying the remaining 203.3 tonnes of gold on tap for sale.

For long, China has been slowly but steadily building up its stockpile of gold and India does not want to be left behind.

[Shiva909]

It was certainly a good idea for India to do so. With the price of gold on the up and up it may provide them with some leverage in the long run.