MUMBAI (Commodity Online): India is still bullish on gold. This was evident when reports said India’s Reserve Bank is still in talks with the International Monetary Fund (IMF) to buy another 200 tonne gold which the international body is ready to dispose of to fund its developmental projects.

Earlier in November India had bought 200 tonnes of gold from the IMF for over $6.7 billion after which the global bullion market witnessed a bull run which lifted the yellow metal prices above $1150 per ounce. On Wednesday, gold prices soared to cross $1180 per ounce on news that India is considering buying more gold from IMF.

The fresh attempt by the Indian central bank has added to the soaring prices of gold and the metal had set a new record on Tuesday.

At the time of the purchase of the first lot of 200 tonnes, RBI had said it was part of its foreign exchange reserves management operations.According to IMF, it has no fixed timetable for completing the sale.

RBI is on a buying spree to enrich its reserves and it wishes to change it to gold rather than dollar. That was evident when India first bought the 200 tonne gold. In just three weeks after it bought the gold, India benefited by $800 million on the investment of $6.7 billion it made in buying 200 tonnes from IMF.

Since 1999, RBI has been periodically valuing its gold reserves at prices close to the market. It has not done so since it purchased the gold from IMF.

RBI bought the 200 tonnes at $1,045 an ounce. The transaction, from IMF to RBI, involved daily sales that were staggered over a two-week period, October 19-30, with each daily sale conducted at a price set on the basis of that day’s market price.

On Tuesday, gold prices stood at $1,168, an increase of 12 per cent over the price RBI paid. The market value of the gold thus stood at $7.5 billion, indicating a cool gain of $800 million for RBI.

RBI holds its forex reserves in a basket of currencies expressed in dollar terms. It is able to earn only a nominal return on the dollar reserves.

However, Prime Minister Manmohan Singh now on a tour to the US said there wasn’t a substitute for the dollar yet. “My own feeling is that we have not entered an era of irreversible shift in the economic strength of the US,” he said ahead of his visit to Washington.

On November 3, the day RBI bought IMF gold, Indian Finance Minister Pranab Mukherjee told the economic editors’ conference that the government wasn’t preferential in its treatment to either to dollar or gold. The buying of gold had a sentimental significance, as the government had to pledge gold with the Bank of England in 1991 to borrow money to maintain imports.