The buying by the Indians surprised the market.

HILTON TARRANT: Well, it's across to Germany now. Paul Walker, the CEO of GFMS, is joining us. Paul, gold bullion a new record - $1096/oz. Is this a continuation of the weaker dollar theme that we've seen?

PAUL WALKER: Well, I think it's a combination of things, actually. The run-up in the last couple of weeks has undoubtedly been related to the weakness of the dollar. I've always just cautioned - the gold story is not always about the strength or weakness of the dollar, and the weak gave it strength over the last couple of days. We had the news of  the Indians buying, which I have to say came as something of a surprise to me. We've always been rather optimistic about the outlook for central bank buying, but I was very surprised to see the Indians stepping up to the plate. So I think it's a combination of things here, and it does really go to the heart of what makes the gold market an interesting place. You do get these surprising announcements from time to time, and the Indian one was certainly one of those.

HILTON TARRANT: That announcement from India - a  big psychological impact on investors. There's a lot of speculation in the market now that China might step up to the plate, and a number of other Asian countries also mentioned.

PAUL WALKER: Well, you know, China has been on the radar screen for a while. We've certainly seen buying coming in from elsewhere in the world. There've been many through sovereign wealth funds. For all intents and purposes one would classify those as central banks or at least official sector purchases, I should say. I think there is this mind shift, and it's been going on for a number of years as the investment flows that have come in from high-net-worth individuals and so many offices that really started this bull rally going back as long as six, seven years ago. It has now become a much more broad-based investment-led rally and, as we've been saying for some time, it could go significantly higher. I guess the question that I always have to raise in the context of this is: how long does investment continue to surge into this market? It could be a lot longer than any of us imagine.

HILTON TARRANT: Paul, what's the next big level - $1100?

PAUL WALKER: Well, clearly I think psychologically this is probably the way a lot of people would look at it. But there are other price levels that I would look at - for example, Gargi Shah, who works for us out at Mumbai, she's just written to me saying the Indians are talking about 18 000, 19 000 rupees per ten grams being the next target. So I think you have to actually broaden the horizons here. We all do tend to cater to Western-centric, but undoubtedly the psychological level of $1100 is significant. I think the issue here is the market at the moment requires sustained inflows. We are talking $30bn to $50bn a year inflows into gold to keep this momentum going. If the Indians are a reflection of a broader trend in this market, then there is probably more of this to come.

HILTON TARRANT: Paul Walker is the chief executive of GFMS.

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