Gold closes in on $US1100 an ounce

The new high was reached 2 hours after the close of Australian trade, when gold was selling at $1083.25 an ounce a gain of $US19.28 on Tuesday's close.

"This will encourage other countries and other investors, especially Indians, who are big buyers anyway, to jump into the market," said Leonard Kaplan, president of Prospector Asset Management in Evanston, Illinois.

The Reserve Bank of India paid $US6.7 billion ($A7.4 billion) for the bullion, which it bought between October 19 and last Friday.

It was "the biggest single central-bank purchase that we know about for at least 30 years in such a short period," said Timothy Green, author of The Ages of Gold. "The only comparable event was the US's steady purchases in the 1930s and 1940s."

Prices also rose to a record in gold traded in Indian rupees. Central banks, the biggest holders of gold, may diversify out of the dollar and buy bullion as ballooning US debt and low interest rates weaken the currency.

"It is but a matter of time until China and the IMF announce much of the same," said Dennis Gartman, an economist and the editor of the Gartman Letter in Suffolk, Virginia.

China, now the sixth-largest holder of gold, has increased its gold reserves by 76 per cent since 2003, to 1054 tonnes, the official Xinhua News Agency reported in April.

The sharemarket closed marginally firmer after a positive reaction to Westpac's earnings result, encouraging economic data and a strong performance by gold stocks.

The S&P/ASX 200 Index finished with a gain of 8.6 points, or 0.19 per cent, at 4540.1. Stocks opened firmer after shrugging off a weak lead from Wall Street but dipped into negative territory in afternoon trading. Westpac closed up 36? at $25.79. Commonwealth was 9? higher at $51.37 and ANZ rose 15? to $22.73. BLOOMBERG, AAP