Precious metals rise again

Riding oil and dropping dollar boost prices

Precious metal prices higher on Monday, 12 October, 2009. Prices rose on Monday following rising crude price and depressed dollar which increased the appeal of precious metals as a hedge against inflation.

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 Monday, gold for December delivery ended at $1,056.7, higher by $8.9 (0.8%) an ounce on the New York Mercantile Exchange. Last week, gold rose to a high of $1,060.4. For the week, gold ended higher by 4.3% last week. Year to date, gold prices are higher by 19.1%.

Gold ended September, 2009 higher by 5.9%. For the third quarter it ended higher by 8.7%. 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 Monday, Comex silver futures for December delivery rose 13 cents (0.7%) to $17.82 an ounce. Last week, silver ended higher by 8.9%.

Silver ended 11.8% higher for September, 2009. Year to date, silver has climbed 58.2% this year. For 2008, silver had lost 24%.

In the currency market on Monday, the dollar firmed up initially after Fed Chairman, Ben Bernanke said last week that the central bank will tighten monetary policy when the economic outlook shows sufficient improvement. But then, with rally in equities, the dollar lost its ground.

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

At the MCX, gold prices for December delivery closed higher by Rs 86 (0.54%) at Rs 15,923 per 10 grams. Prices rose to a high of Rs 15,947 per 10 grams and fell to a low of Rs 15,860 per 10 grams during the day's trading.

At the MCX, silver prices for December delivery closed Rs 118 (0.43%) higher at Rs 27,443/Kg. Prices opened at Rs 27,363/kg and rose to a high of Rs 27,625/Kg during the day's trading.