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SAN FRANCISCO (MarketWatch) -- Gold futures hit a new closing high above $1,084 an ounce after India's central bank said it would purchase 200 metric tons of bullion and the dollar, while higher, trimmed its gains.

Gold for December delivery, the most active contract, closed up $30.90 an ounce, or 2.9%, to $1,084.90 an ounce, a closing high for the contract. Intraday, it rose as high as $1,085.2 an ounce.

After the end of floor trading electronic trading on Comex, the contract continued to rise, touching $1,088.50 an ounce.

The more thinly traded November contract also added $30.90, or 2.9%, to $1,084.30 an ounce, a record high for a front-month contract.

Silver, copper and other metals futures also closed higher.

In a break with recent trends, the gold and dollar both rose while U.S. stocks fell.

On Tuesday, India's appetite for gold reserves pushed gold higher in European trading and underpinned its advance during the New York session. The dollar also rose as investor nervousness ahead of Wednesday's Federal Reserve meeting pulled investors away from stocks and other so-called risk assets.

"The reason for the gold move today is mostly India's purchase," said Doug Keller, managing director at Binary Research, a commodities research firm.

Gold has gotten a lift from the roughly 14% drop in the U.S. dollar since early March, moving alongside a rise in the U.S. stock market.

"Any further strengthening in the dollar would probably cap gold in the short term," said Keller.

Also driving prices higher, the early advance helped gold break out of a technical range that has capped action in the past month. The moves led to what Keller described as an "anomaly in the market of gold decoupling from the dollar."

December silver futures closed 74 cents, or 4.5%, higher at $17.18 an ounce. December copper futures added a penny to $2.956 a pound.

Platinum for January delivery rose $18.1, or 1.4%, to $1,356.20 an ounce.

Palladium for December delivery struggled rose $1.4, or 0.4%, to $327.75 an ounce.

Dollar trims advance

Helping boost metals, the Commerce Department said factory orders rose 0.9% in September, the fifth monthly increase in six months and more than economists expected. See full story.

The report, and a subsequent moderation in stock losses, knocked the U.S. dollar further off its lows. The moderation helped gold, copper, oil and other hard assets, which tend to gain in value when the U.S. dollar weakens.

The dollar index , which tracks the performance of the greenback against a basket of other major currencies, rose to 76.357 from around 76.247 in North American trade late Monday. It had earlier reached a high of 76.817.

The S&P 500 Index reversed higher, ending up 2.5 points at 1,045, while the Dow Jones Industrial Average closed slightly lower.

Mining stocks rallied. Shares of Newmont Mining Corp. added 1.7%, while Freeport-McMoRan Copper & Gold gained 2.2%. SPDR Gold Trust , an exchange-traded fund, rose 2.4%.

IMF sale

The International Monetary Fund said Monday it sold 200 metric tons of gold to the Reserve Bank of India. That's part of a total of 403.3 metric tons of gold approved for sale in September.

The news had boosted December gold to $1,066.90 an ounce in European trading.

The India transaction, which is in the process of being settled, involved daily sales that were phased over a two-week period between Oct. 19 and Oct. 30, with each daily sale conducted at a price set on the basis of market prices prevailing that day, the IMF said. The total sales proceeds are equivalent to $6.7 billion.

This news is "very bullish," wrote analysts at bullion dealers GoldCore in a note to clients.

"The sales occurred over two weeks prior to October 30 when gold was trading between $1,030/oz and $1,070/oz, showing that physical demand for gold is very robust at these levels," they said.

Gold has also found support due to technical buying and a lack of major negative news, according to Chintan Karnani, analyst at Insignia Consultants in New Delhi.

And gold traders are "position building" ahead of the three major upcoming central bank meetings: the U.S. Federal Reserve, the European Central Bank and the Bank of England, he said, with none of them expected to change their interest-rate outlook until the first quarter of 2010.

"In my view, it will be a very volatile week," said Karnani.

Analysts at Credit Suisse said further risks to gold prices loom this week as the Federal Reserve holds its interest-rate setting meeting Wednesday.

The FOMC may alter its statement to a "less dovish tone, which could trigger some profit-taking across the precious metals space," they wrote in a report.