Bullion metals shine

Precious metals rise despite a strong dollar

Bullion metal prices ended higher on Tuesday, 20 July 2010 at Comex. Both precious metals traded to their best levels in morning trade and spent the remainder of the session chopping around just shy of their respective highs. Prices rose despite a strong 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 Tuesday, gold for August delivery ended at $1,191.7 an ounce, higher by $9.9 (0.8%) an ounce on the New York Mercantile Exchange. Last week, gold ended lower by 1.7%.

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 9.8%.

On Tuesday, September Comex silver futures ended higher by 15 cents (0.9%) at $17.693 an ounce. Last week, silver ended lower by 1.6%. 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 4.9%.

The only economic report scheduled for the day showed a 5% month-over-month decline in housing starts for June. That took starts to an annualized rate of 549,000 units, which is below the annualized rate of 575,000 units that had been widely expected. In contrast, building permits for June increased 2.1% month-over-month to an annualized rate of 586,000, which is above the annualized rate of 572,000 units that had been widely expected.

In the currency market on Tuesday, the dollar index, which measures the strength of the dollar against a basket of six other currencies rose by 0.3% after rising 0.5% earlier in the day and also dipping in the negative territory in between.

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 82 (0.44%) at Rs 18,339 per ten grams. Prices rose to a high of Rs 18,350 per 10 grams and fell to a low of Rs 18,191 per 10 grams during the day's trading.

At the MCX, silver prices for September delivery closed Rs 57 (0.12%) higher at Rs 28,630/Kg. Prices opened at Rs 28,620/kg and rose to a high of Rs 28,668/Kg during the day's trading.