Washington: The International Monetary Fund has sold 200 tonnes of gold to the Reserve Bank of India for $6.8 billion, quietly executing half of a long-planned bullion sale that had threatened to slow gold's rally.

The IMF's plan to sell some of its gold holdings had been flagged for a year before it was formally approved in September, the speed of the deal and the buyer were a surprise for traders, who had expected China – not India – to be the leading contender as Beijing diversifies its vast reserves.

The sale, which an IMF official said was concluded at an average price of about $1,045 an ounce over a two-week period in the latter half of October, will relieve the market of some of uncertainty over how and when the fund would execute its plan to sell 403.3 tonnes of gold, about one-eighth of its total stock.

"This transaction is an important step toward achieving the objectives of the IMF's limited gold sales program, which are to help put the fund's finances on a sound long-term footing and enable us to step up much-needed concessional lending to the poorest countries," IMF Managing Director, Dominique Strauss-Kahn, said in a statement.

While the threat of IMF and central bank sales did not stop gold prices from soaring to a record high $1,070.40 last month, aided by a falling US dollar, traders said the IMF news could add to the market's upward momentum.

"The fact that they've sold the gold to India would suggest there's going to be fewer official sales by the IMF on the market. So that might be a positive theme for the gold price," said commodities strategist at Commonwealth Bank of Australia David Moore.

Gold rose about 0.4 per cent to $1,063 an ounce on Tuesday.

Although India is the world's biggest consumer of gold, primarily in the form of jewellery and investment among its billion-plus people, its central bank had given few indications of being a front-runner in the move to diversify into bullion.

India's foreign exchange reserves held at the central bank totalled $285.5 billion on October 23, of which gold comprised more than $10 billion. The latest purchase would appear to lift its share of gold holdings to an estimated 6 per cent or so, much less than most of the developed world but four times China's share.

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