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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 tonnes of gold which the international body is ready to dispose of to fund development projects.

Earlier this month, India bought 200 tonnes of gold from the IMF for more than $6.7 billion, following this the global bullion market has enjoyed a bull run, seeing 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.

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 the  IMF, it has no fixed timetable for completing the sale.

RBI is on a buying spree at present in a bid to enrich its reserves & it would seem that gold rather than dollar is the target. In just three weeks from its initial block purchase, India has benefited to the tune of $800 million .

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 through October 19-30, with each daily sale conducted at a price set on the basis of that day’s basket price. On Tuesday, gold prices stood at $1,168, an increase of 12% over the price RBI paid.

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.

This comes a day after the Business Standard released an article stating : ” the availability of recycled gold in India, the world’s largest consumer, rose 12.5 % in the third quarter of the current calendar year on heavy selling of used jewellery by retail consumers at record high prices”