Gold hits record above $1,095/oz

By Jan Harvey

LONDON (Reuters) - Gold hit a record high above $1,095 an ounce on Wednesday as dollar weakness added to momentum triggered by India's purchase of 200 tonnes of gold from the IMF.

Gold is now poised to target the psychological $1,100 an ounce level, dealers said.

Spot gold struck a high of $1,095.40 an ounce and was bid at $1,094.10 an ounce at 3:52 p.m., against $1,084.50 late in New York on Tuesday.

The IMF said on Tuesday it had sold 200 tonnes of gold to the Reserve Bank of India, half of a long-planned bullion sale that had threatened to slow gold's ascent.

"India has (prompted) new speculation of pent-up demand for gold diversification by central banks," said Michael Lewis, head of commodities research at Deutsche Bank.

"There is a long list of central banks which have very low gold reserve ratios, and in aggregate central banks should be net buyers of gold over the next year for the first time in 20 years."

Market watchers are now speculating over the destination of the remaining 403 tonnes of gold the IMF has to sell.

Weakness in the dollar has added to this momentum, dealers said. The dollar index retreated from a one-month high on Wednesday as traders braced for a policy decision from the Federal Reserve.