RBI purchase 'highlights value of Gold Investment'

A senior figure at Reliance Mutual Fund has claimed today (November 5th) that the Gold Buying carried out by India's central bank is bullish for the yellow metal.

The Reserve Bank of India (RBI) announced this week that it has snapped up 200 metric tonnes of gold from the International Monetary Fund as part of the body's sales program.

Now Madhusudan Kela, CIO of the country's largest mutual fund investment management company, has explained that the move was underlined by the view that Gold Investment is a prudent strategy.

"It is a diversification of asset for the reserve bank and gold is a good source of investment," he told the Financial Express.

"The dollar weakness, especially against the yen and the euro, must have prompted this decision."

Meanwhile, Frank Lesh, a Chicago-based trader at FuturePath Trading, has offered a similarly optimistic view relating to the future movements of gold prices.

In an interview with Bloomberg, he noted that investors are turning to the yellow metal as a hedge against inflation because they believe rising consumer prices are around the corner.

"Risk is back in favor. Risk appetite is equated with inflation and you buy gold to fight inflation," he told the news provider.

"Economic strength can lead to inflation with everybody chasing assets. That is supportive for the gold market."

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