Gold Futures Hit Record High

NEW YORK (TheStreet) -- Gold for December delivery hit an all-time high of $1,087 an ounce on Tuesday, as investors shrugged off a stronger U.S. dollar and cheered buying from India.

Gold delivery for December was rising $31.10 to $1,085.10 an ounce at the Comex division of the New York Mercantile Exchange. The contract has traded as low as $1,055.50 and as high as $1,087.

Silver followed suit and was popping 75 cents to $17.20 and copper prices were flat at $2.96.

Gold: The Right Trade

Gold surged on news that the Reserve Bank of India bought 200 tons of gold from the IMF for $6.7 billion, around $1,045 an ounce. Historically, fall is a strong buying season for India, but many analysts were concerned that Indian consumers would temper their purchases as gold hit record highs. India now holds 6% in gold reserves which is still considerably lower than the 20% of gold reserves it held in 1994. Gold has been trading in close opposition to the U.S. dollar, but as the U.S. dollar index rose to $76.41, gold ignored the currency to focus on bullish demand.

The IMF still has 203 tons to sell, but probably won't sell the gold in the open market. Rumored buyers are China, Russia and Brazil. Reserve Bank of India's purchase will help drive gold prices higher, Bulliondesk.com analyst James Moore writes in his daily metals report.

"Having seen gold consolidate and with dips continuing to draw strong support, gold could be poised to make a fresh challenge to the upside as the [Reserve Bank of India] purchase announcement clears some of the overhanging resistance." India's huge purchase could lead to new buying from retail investors who were waiting to jump into the market.