Nov. 25 (Bloomberg) -- Gold climbed to a record in New York and London on a further drop by the dollar and on a report that India may buy more bullion for its central-bank reserves.

Gold futures have rallied 12 percent since India said on Nov. 3 it bought 200 metric tons of metal from the International Monetary Fund. The country, the world’s largest gold consumer, is open to additional purchases from the IMF, the Financial Chronicle newspaper reported. The U.S. Dollar Index fell for a third day, sliding to the lowest level in more than 15 months.

“Central-bank buying has been one of the main factors of this recent rally,”Peter Fertig, owner of Quantitative Commodity Research Ltd. in Hainburg, Germany, said today by phone. “The weaker dollar is driving commodities higher.”

Bullion futures for February delivery on the New York Mercantile Exchange’s Comex division climbed as much as $17.30, or 1.5 percent, to $1,184.70 an ounce. They traded at $1,181.70 by 8:40 a.m. local time. Up for a ninth day, futures are set for the longest stretch of gains since August 1982.

Gold for immediate delivery added 1 percent to $1,180.63 an ounce in London after earlier reaching $1,182.95. Prices may advance to $1,200 next week, according to Fertig.

The metal rose to a record $1,176.50 an ounce in the morning “fixing” in London from $1,163.25 at yesterday’s afternoon fixing. Some mining companies use fixings to sell production. Spot prices are up 34 percent this year.

Overtaking Russia

A further purchase by India would make its stockpile the world’s eighth-largest, overtaking the Netherlands and Russia, according to figures from the producer-funded World Gold Council. Reserve Bank of India Governor Duvvuri Subbarao declined to comment on the report.

“Actions from central banks are very important at the moment,” said Eugen Weinberg, an analyst at Commerzbank AG. “The purchase from India was like a seal of prices above $1,000 an ounce. Also, other central banks are buying gold.”

The central banks of Russia and Sri Lanka have acquired gold, prompting analysts at Bank of America Merrill Lynch, Societe Generale and Barclays Capital to forecast more such purchases. Governments are the biggest bullion holders. Mauritius bought 2 tons of gold from the IMF last month for $71.7 million after India’s $6.7 billion purchase.

The IMF, which set out two months ago to dispose of one- eighth of its gold reserves, still has more than 200 tons to sell. It will do so on a “first-come, first-served” basis, Andrew Tweedie, head of the fund’s finance department, said in a Nov. 20 interview.

Central-Bank Demand

“The additional stimulus for gold is the increased demand emerging from central banks, who are now keen to diversify away from the falling value of dollar reserves,” said Mark Pervan, a commodity strategist with ANZ Banking Group Ltd. in Sydney.

Bullion typically moves inversely to the U.S. currency. The dollar index, a six-currency gauge of the greenback’s value, slid as much as 0.9 percent today after Federal Reserve officials refrained from voicing concern over this year’s 8.4 percent decline.

Assets held by the SPDR Gold Trust, the biggest exchange- traded fund backed by bullion, expanded for a second day yesterday to 1,122.37 tons, the most since June 29. The fund’s holdings reached a record 1,134 tons on June 1. Gold held in ETF Securities Ltd.’s exchange-traded products fell 0.5 percent to 7.936 million ounces yesterday, its Web site showed.

“Speculators betting on higher prices have a very good argument on their side,” Weinberg said in a Bloomberg Television interview. “It’s the weak dollar, the possibility of longer-term inflation, and also actions from central banks. It’s definitely investment demand that is pushing prices higher.”

Scrap Sales

The rally has pushed the 14-day relative strength index for futures above the level of 70 viewed by some investors and analysts who follow technical charts as a sign that prices may soon fall. Today’s reading was 85.05.

“Technically, gold remains overbought,” Walter de Wet, a London-based Standard Bank Ltd. analyst, wrote today in a report. “We have seen some scrap metal coming to the market at current levels, but still not enough to offset buying.”

Silver for March delivery in New York gained 1.4 percent to $18.755 an ounce. Platinum for January delivery climbed 2.7 percent to $1,482 an ounce, the highest price in more than 14 months. Palladium for March delivery rose 1.7 percent to $377 an ounce.

ETF Securities’ silver holdings rose 0.7 percent to a record 22.861 million ounces yesterday, its Web site showed. Platinum assets added 164 ounces to a record 426,639 ounces, while palladium holdings climbed 1.4 percent to an all-time high of 624,859 ounces.