Gold price breaks $1,195 an ounce

The price of gold soared above 1,195 dollars an ounce for first time in history here on Thursday, following a purchase of IMF gold by Sri Lanka's central bank.

The price of gold has soared above 1,195 dollars an ounce for first time in history, following a purchase of IMF gold by Sri Lanka's central bank.

Gold hit 1,195.13 dollars per ounce at around 0400 GMT on the London Bullion Market, extending its record-breaking run.

The precious metal has won support in recent weeks from inflationary fears, the weak US currency and increasing moves by central banks to diversify assets into gold.

The International Monetary Fund (IMF) announced Wednesday it had sold 10 tonnes of gold to Sri Lanka's central bank for 375 million dollars as part of a restructuring of its financial resources.

It was the third IMF sale of gold in a month as the Washington-based institution seeks to reduce its dependence on lending revenue and bolster its finances amid the global economic crisis.

The sale brought the total IMF gold sold to central banks to 212 tonnes. India bought 200 tonnes between October 19 and 30 for 6.7 billion dollars and Mauritius bought two tonnes on November 11 for 71.7 million dollars.

Prices had smashed their way to record levels on Wednesday amid a newspaper report that India was mulling the purchase of more IMF gold reserves.

A weaker greenback makes gold cheaper for buyers using stronger currencies, which tends to boost demand and prices.

At the same time, fears over higher inflation have also lifter the market because gold is widely regarded as a "safe-haven" investment in times of economic uncertainty.