LONDON, Nov 7: Gold prices struck a series of record highs this week, eventually spiking above $1,100 for the first time, as Asian central banks snapped up the precious metal as an alternative to the dollar.

PRECIOUS METALS: The price of gold hit a record high above $1,100 an ounce in London trading Friday following a report that Sri Lanka had joined India in purchasing the precious metal in favour of a weak US currency.

The Central Bank of Sri Lanka has announced that it is buying gold to diversify its reserves, industry body the World Gold Council (WGC) said in a statement issued before gold struck a record high of $1,101.42 .

Also Friday, the dollar weakened against the euro as official data showed the US unemployment rate in double digits for the first time since 1983 after reaching 10.2 per cent in October.

Gold futures meanwhile had struck a series of highs earlier in the week after the IMF said it had carried out a massive sale of the yellow metal to India.

Over the past year central banks, which have been net sellers of gold are now a new and increasingly important source of demand, WGC chief executive Aram Shishmanian said in the council’s statement.

This latest announcement demonstrates that many central banks are reassessing their reserve asset management policies. Gold had reached a record high of $1,087.80 on Tuesday as the IMF said it had sold 200 tons of gold to India’s central bank over a two-week period last month for $6.7 billion to bolster its finances.

Gold and other commodity prices have surged in recent months amid a move away from a sliding dollar.

The move accelerated last month on a report that Gulf states may stop using the greenback for oil trading.

The metal is also winning support from fears over a possible spike in inflation, as gold is widely regarded by investors as a safe store of value.

The sale to India was nearly half the 403.3 tons of gold that the IMF has targeted for sale over the coming years.

The Washington-based IMF, which currently holds 3,217 tons of gold, is the third-largest official holder of the metal after the United States and Germany.

India is the world’s biggest consumer of gold, importing between 700 and 800 tons of the commodity every year or 20 per cent of global demand.

A senior IMF official said that the IMF was “lucky” in selling the 200 tons to India for roughly $1,045 an ounce, compared with $850 an ounce in April 2008.

Gold’s price, which has risen more than 20 per cent this year, has a bright future thanks to improving demand caused by the financial crisis, industry experts said this week.

Although it’s difficult to predict in the short term, the overall picture is very healthy, Mark Lynam, an executive for AngloGold Ashanti — the world’s third largest gold producer — told the London Bullion Market Association annual conference in Edinburgh.

By late Friday on the London Bullion Market, gold surged to $1,096.75 an ounce from $1,040 a week earlier.

Silver jumped to $17.52 an ounce from $16.57 .

On the London Platinum and Palladium Market, platinum gained to $1,359 an ounce at the late fixing on Friday from $1,320.

Palladium climbed to 330 dollars an ounce from $324.

OIL: The price of oil rebounded, briefly passing 81 dollars after the US Department of Energy (DoE) reported an unexpected drop in crude stockpiles.

Prestige Economics analyst Jason Schenker said it was a surprising report ... but doesn’t fundamentally change the picture of very large crude inventories and near historically high distillates inventories. He said the weekly DoE data published Wednesday had caught a number of traders “off guard,” sending prices briefly above $81.

US crude reserves sank by four million barrels in the week ending October 30. That confounded market expectations for a gain of 1.4 million barrels.

The department added that there were small drops in stockpiles of gasoline (petrol) and distillates, which include heating fuel and diesel.

Oil prices had already won ground on Tuesday as commodities gained a boost from gold futures.

By Friday on the New York Mercantile Exchange (NYMEX), light sweet crude for delivery in December rose to $78.85 from $78.11 a week earlier.

On London’s InterContinental Exchange (ICE), Brent North Sea crude for December delivery climbed to $77.28 from $76.38 .

BASE METALS: Base metals prices extended losses in an “overheated” market, said VTB Capital analyst Andrey Kryuchenkov.

In the long run this correction will prove positive, especially for the overbought copper. The red metal could well retest recent highs after Chinese buying returns.”By Friday on the London Metal Exchange, copper for delivery in three months fell to $6,500 a ton from $6,620 a week earlier.

Three-month aluminium dropped to $1,916 a ton from $1,950.

Three-month lead decreased to $2,315 a ton from $2,347.50 .

Three-month tin slid to $14,775 a ton from $14,900.

Three-month zinc eased to $2,194 a ton from $2,220.

Three-month nickel recoiled to $17,825 a ton from $18,610.

COCOA: Cocoa prices stretched losses after striking 24-year highs a fortnight ago on prospects of a poor crop in top producer Ivory Coast.

By Friday on LIFFE, London’s futures exchange, the price of cocoa for delivery in December dipped to 2,099 pounds a ton from 2,134 pounds a week earlier.

On the New York Board of Trade (NYBOT), the December cocoa contract dropped to $3,186 s a ton from $3,333.

SUGAR: Sugar rebounded but failed to forge new 28-year pinnacles struck recently on the back of tight supplies.

By Friday on LIFFE, the price of a ton of white sugar for delivery in March edged up to 589.50 pounds from 584.30 pounds a week earlier.

On NYBOT, the price of unrefined sugar for March nudged higher to 22.63 US cents a pound from 22.62 cents.

GRAINS AND SOYA: Prices ended mixed after a week’s volatile trade as investors tracked the dollar’s performance and US weather conditions.

The market has been choppy, we’ve been watching the weather very close, said US Commodities analyst Jason Roose.

The outside markets have been very disturbing, the dollar is weak. By Friday on the Chicago Board of Trade, maize for delivery in December rose to $3.70 a bushel from $3.66 a week earlier.

January-dated soyabean meal — used in animal feed — fell to $9.64 from $9.76.

Wheat for December gained to $5.08 a bushel from $4.94 .

COFFEE: Coffee prices diverged.

By Friday on LIFFE, Robusta for delivery in January slid to $1,437 a ton from $1,451 a week earlier.

On the NYBOT, Arabica for December rose to 139.95 US cents a pound from 137.50 cents.

RUBBER: Malaysian rubber prices rose amid the rainy season in producing countries, dealers said.

On Friday, the Malaysian Rubber Board’s benchmark SMR20 climbed to 234 US cents a kilo from 231.95 cents a week earlier.—AFP