Precious metals shine on better GDP number

Gold and silver prices gain almost 3% in July

Precious metal prices rose on Friday, 31 July, 2009. Prices rose as the dollar weakened following the GDP numbers for second quarter which showed that US economy contracted at a smaller pace than expected.

Generally, a stronger dollar pressures demand for dollar-denominated commodities, such as crude oil and gold, which become more expensive for holders of other currencies and also vice versa.

On Friday, gold for August delivery ended at $953.7, higher by $18.8 (2%) an ounce on the New York Mercantile Exchange. It rose as high as $958.10 earlier but also fell to $932. For the week, gold ended almost unchanged. Year to date, gold prices are higher by 7.5%. Gold ended July, 2009 higher by 2.8%.

Before this, for the second quarter, gold ended higher by 0.5%. The metal had gained 4.3% in the first quarter of this year.

On 17 March, 2008 prices had skyrocketed to a high of $1,034/ounce. But prices have dropped somewhat (9.5%) since then.

On Friday, Comex silver futures for September delivery gained 45.5 cents (3.4%) at $13.94 an ounce. For the week, silver ended higher by 0.5%.

Silver ended 2.7% higher for July, 2009. For second quarter, silver rose 4.5%. Year to date, silver has climbed 25% this year. For 2008, silver had lost 24%.

In the currency market on Friday, the dollar index, a six-currency gauge of the greenback's value, fell by almost 0.9%.

The advance Q2 GDP report showed the economy contracted at an annualized rate of -1%, marking the fourth consecutive quarter of decline. That was much improved from a downwardly revised -6.4% (from -5.5%) in the first quarter and it was also better than the expected -1.5% decline.

In 2008, gold prices ended higher by 5.5%. The dollar index had gained 12% that year.