Gold jumped and was 0.5 percent away from a record after the International Monetary Fund said it is selling 200 metric tons of the metal to the Reserve Bank of India and as investors sought an alternative to a weaker dollar.

Bullion has gained 21 percent this year, as the dollar slumped 6.4 percent against major global currencies, and reached an all-time high of $1,070.80 on Oct. 14. The MSCI Asia Pacific Index of regional stocks rose after U.S. equities advanced as manufacturing topped projections, providing more evidence of an economic recovery.

“We’ll probably see gold test a previous high today as we have a weaker dollar and stock markets across the region are following” with gains, said Wallace Ng, chief dealer with Fortis Bank in Hong Kong. “I’m positive about gold.”

Gold for immediate delivery increased 0.5 percent to $1,064.99 an ounce at 11:15 a.m. in Singapore. December-delivery gold jumped 1.1 percent to $1,065.50 an ounce on the New York Mercantile Exchange’s Comex division, the highest price for the most-active contract since Oct. 23.

The Institute for Supply Management’s factory index rose to 55.7, a three-year high and exceeding every estimate of the 70 economists surveyed by Bloomberg News, data from the Tempe, Arizona-based group showed yesterday. Other reports indicated housing kept gaining after its worst recession since the 1930s.

IMF Sale

The IMF said it will receive $6.7 billion from the transaction with India. The Washington-based lender’s first bullion sale in nine years, almost half the 403.3 tons it agreed in September to sell, is part of a plan to shore up its finances and lend at reduced rates to low-income countries.

“This is positive for the gold market, as bilateral sales which avoid the open spot market will avoid adding to marginal physical supply,” said David Barclay, a commodity strategist with Standard Chartered Bank in Hong Kong.

Asian nations, which have amassed stockpiles of foreign currency reserves since the 1998 financial crisis, have shown increased interest in diversifying out of U.S. assets as the dollar loses value against other currencies.

Central banks and other “official” entities such as the International Monetary Fund held 26,350 tons of gold at the end of last year, according to London-based research company GFMS Ltd. By comparison, investment holdings in exchange-traded funds were 1,222 tons, GFMS said in its 2009 Gold Survey report.

Gold Holdings

Bullion holdings in the SPDR Gold Trust, the biggest exchange-traded fund backed by the metal, were unchanged at 1,103.52 tons as of Nov. 2, according to the company’s Web site.

Hedge funds and other large speculators trimmed net-long positions, or bets on higher prices, in New York gold futures for a second week as of Oct. 27, Commodity Futures Trading Commission data on showed on Oct. 30.

Among other precious metals, silver added 1.1 percent to $16.6425 an ounce, platinum advanced 1.4 percent to $1,354 an ounce and palladium was up 1 percent to $326.50 an ounce.

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