Bullion metal prices rise

Weak dollar imparts shine to precious metals

Bullion metal prices ended higher on Thursday, 29 July 2010 at Comex. Prices rose due to a weak dollar.



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 $1,168.4 an ounce, higher by $8 (0.7%) on the New York Mercantile Exchange. Last week, gold ended lower by a mere 0.1%.

Gold ended the month of June higher by 2.5%. For the second quarter, gold ended up by 12%, its seventh consecutive quarterly gain. For the first quarter of this year, gold rose by 1.7%. On a year to date basis, gold is higher by 7.8%.

On Thursday, September Comex silver futures ended higher by 18 cents (1%) at $17.62 an ounce. Last week, silver ended lower by 0.6%. For the second quarter, silver ended higher by 3.1%. For the first quarter of this year, silver rose by 3%. On a year to date basis, silver is higher by 4%.

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 0.7%.

The Labor Department in US reported on Thursday, 29 July 2010 that the number of people applying for initial state unemployment insurance benefits fell 11,000 to 457,000 in the week ended 24 July 2010 against an expected level of 460,000. The initial claims level for the week ended 17 July was revised 4,000 higher to 468,000. The claims data measure the number of workers who lost their jobs through no fault of their own and were eligible for unemployment benefits.

The four-week average of initial claims, a better gauge of employment trends than the volatile weekly number fell 4,500 to 452,500, reaching the lowest level since May.

Continuing claims in the week ended 17 July rose 81,000 to 4.57 million. The four-week average of these continuing claims fell 18,000 to 4.55 million, hitting the lowest level since late December 2008.

Initial state claims are about 21% below the prior's year level. The level of continuing claims is about 26% less than in the prior year.

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 lower by Rs 10 (0.05%) at Rs 17,762 per ten grams. Prices rose to a high of Rs 17,818 per 10 grams and fell to a low of Rs 17,660 per 10 grams during the day's trading.

At the MCX, silver prices for September delivery closed Rs 13 (0.04%) higher at Rs 28,271/Kg. Prices opened at Rs 28,300/kg and rose to a high of Rs 28,354/Kg during the day's trading.