NEW DELHI (Commodity Online): Will India do it again? That is the question being asked by investors and bullion market analysts now.
After India's surprise buying of 200 tonnes of IMF gold in November last year, now several news agency reports said that India is another potential candidate to buy more gold from the International Monetary Fund when it begins selling 191.3 tonnes of the precious metal.
The uncertain outlook for two of the world's major reserve currencies - the dollar and euro - provides a spur for central banks, including the Reserve Bank of India, to buy gold.
When India bought IMF gold in November last, it boosted the gold prices which hit record highs then.
The sale is part of an IMF programme announced last year to sell a total of 403.3 tonnes of gold, or about one-eighth of its total stock.
RBI was the biggest buyer in the IMF gold sale last year, snapping up 200 tonnes over two weeks and boosting its holdings to 10th largest among central banks.
The RBI's gold holdings rose to $18.1 billion, or 6.46 per cent, of total reserves on February 12. Its holdings on October 30 were $10.8 billion or 3.80 per cent, which did not include the IMF gold buy.
There were rumours earlier that China will bid for the IMF gold in the second phase sale. But, according to analysts, China is unlikely to buy the gold as it is not feasible for China to buy the IMF bullion, as any purchase or even intent to do so would trigger market speculation and volatility.
Some analysts had earlier said China would purchase the IMF gold in an effort to diversify its dollar asset-dominated foreign exchange reserves. According to estimates, over 70 percent of China's $2.4 trillion foreign exchange reserves are in dollar assets.