Bullion metals glitter

Weak economic data impart shine to precious metals

Bullion metal prices ended higher on Thursday, 24 June 2010 at Comex. Weak set of economic data at Wall Street and shaky dollar pushed prices higher on Thursday.



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. Recently, the embattled euro has played stronger role in moving prices rather than dollar fluctuation. Bullion metals have registered increase in prices despite strong dollar in recent times and vice versa.

On Thursday, gold for August delivery ended at $1,245.9 an ounce, higher by $6 (0.9%) an ounce on the New York Mercantile Exchange. During intra day trading, prices rose to a high of $1,249.5. Last Friday, prices rose to a high of $1263.7 during intra day trading. Last week, gold ended higher by 2.3%.

Gold for June delivery had settled above $1,200 in early December 2009, only to pull back to $1,172 area and dip as much as the $1,050 vicinity in early February 2010. Gold ended May higher by 3%. For the month of April, gold ended higher by 6%. For the first quarter of this year, gold rose by 1.7%, its sixth quarterly rise. On a year to date basis, gold is higher by 13.2%.

On Thursday, July Comex silver futures ended higher by 28 cents (1.5%) at $18.73 an ounce shrugging off earlier weakness. Last week, silver ended higher by 5.2%. For May, silver shed 1.1%. For the month of April, silver ended higher by 4.1%. For the first quarter of this year, silver rose by 3%. On a year to date basis, silver is higher by 9.5%.

In the currency market on Thursday, the dollar index, which measures the strength of the dollar against a basket of six other currencies fell by 0.2%.

The Commerce Department reported on Thursday, 24 June 2010 that the steady upward trend in the manufacturing sector hit a bump in May as a big drop in orders for new airplanes pushed total durable-goods orders down 1.1%, the largest decline since last August. April's orders were revised up to a 3.0% gain from 2.8% previously reported.

Separately, The Labor Department reported on Thursday, 24 June 2010 that initial claims (first-time applications for state unemployment benefits) fell by 19,000 last week to a seasonally adjusted 457,000, the lowest in six weeks confirming that U.S. labor markets remain weak. The report was close to market expectations, as market was looking for a drop to 460,000.

Gold had ended FY 2009 higher by 24%. Silver futures had ended 2009 up 50%. The dollar index had lost 4.2% against its counterparts last year.

Last year, after hitting a low at $807.30 per ounce on 15 January 2009, gold futures rallied almost 51% to hit an all-time high at $1217.40 per ounce during early December of 2009 but fell from those levels at the end. Silver futures had hit a low at $10.42 on 15 January 2009 and hit a high at $19.30 per ounce on 2 December 2009. Like gold, silver also ended lower than its all time high level.

At the MCX, gold prices for August delivery closed higher by Rs 97 (0.51%) at Rs 18,790 per ten grams. Prices rose to a high of Rs 18,854 per 10 grams and fell to a low of Rs 18,595 per 10 grams during the day's trading.

At the MCX, silver prices for July delivery closed Rs 226 (0.8%) higher at Rs 29,498/Kg. Prices opened at Rs 29,300/kg and rose to a high of Rs 29,610/Kg during the day's trading.