NEW YORK (Bloomberg) — Gold advanced to a record for the third time this week after Sri Lanka's central bank purchased bullion and the dollar extended its decline, spurring investors to find an alternative.

Sri Lanka bought 10 metric tons from the International Monetary Fund for about $375 million, the bank said yesterday in Washington, following India, Russia and Mauritius in the rush for gold. The metal, which typically moves inversely to the dollar, touched $1,195.13 an ounce after the US currency fell to a 15-month low against six major counterparts.

"A lot of central banks want to diversify out of US dollar holdings and replace them with gold," said Ben Westmore, an analyst with National Australia Bank. "What it means is you've got a lot of added demand in the gold market that not many people would have expected." China is "quite a likely" buyer of the IMF's gold in the coming weeks, he added.

Gold for immediate delivery traded at $1,192 an ounce at 2 p.m. Bermuda time, compared with yesterday's close of $1,191.80. February-delivery gold rose 0.5 percent to $1,194.80 after climbing to a record $1,196.80 on the New York Mercantile Exchange's Comex division. The Reuters Jefferies CRB Index of 19 commodities gained the most in more than a week yesterday.

Sri Lanka's purchase, announced yesterday, followed a Financial Chronicle report that India, the world's largest consumer, may add to a 200 ton purchase it made last month from the IMF. Reserve Bank of India Governor Duvvuri Subbarao declined to comment.

The transaction is part of Sri Lanka's plan to diversify its reserves and it has been "gradually" accumulating the metal in the last seven months, Central Bank Governor Nivard Cabraal said in an interview in Singapore today.

"Gold is a good anchor and hedge to have in these volatile circumstances," the governor said. "We think it's a good time to buy."

Sri Lanka's buying was the third sale this month of IMF bullion to a central bank, after India bought the 200 tons for $6.7 billion and Mauritius purchased 2 tons for $71.7 million. The three sales leave about 190 tons remaining from the 403.3 tons the IMF announced September 18 it would divest to shore up its finances.

The central banks of Russia and Sri Lanka have acquired gold recently, prompting analysts at Bank of America Merrill Lynch, Societe Generale and Barclays Capital to forecast more purchases.