Bullion metals continue to glitter

Prices rise as dollar continues to stay weak

Bullion metal prices ended higher on Tuesday, 03 August 2010 at Comex. A weak dollar helped prices rise modestly today.



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 December delivery ended at $1,187.5 an ounce, higher by $2.1 (0.2%) on the New York Mercantile Exchange. Prices rose for five consecutive sessions. Last week, gold ended lower by a mere 0.3%.

Gold ended the month of July lower by 5%. It was the worst monthly loss for gold since December 2009. Before this, it ended 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 9.2%.

On Tuesday, September Comex silver futures ended higher by 2 cents (0.03%) at $18.42 an ounce. Last week, silver ended almost unchanged. For the month of July 2010, silver shed 3.7%. 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 8.5%.

In the currency market on Tuesday, the dollar index, which tracks the strength of dollar against a basket of six other currencies, fell by 0.3%.

China announced on Tuesday moves to broaden its gold market, including letting more banks to import and export gold and creating more yuan-denominated gold derivatives.

The Commerce Department in US reported on Tuesday, 03 August 2010 that the savings rate among U.S. households rose to the highest level in a year in June as income and spending were flat. Income was unchanged in June, failing to show growth for the first month since July 2009. Consumer spending was also flat. Personal savings rate rose to 6.4% in June, the highest level in a year. The June report was slightly weaker than expected and included downward revisions to figures from April and May. Market had been looking for June income to rise by 0.2%, with spending pegged to increase 0.1%.

In a separate report, the Commerce Department in US reported on Tuesday, 03 August 2010 that factory orders decreased 1.2% in June 2010. It was much lower than market expectation of a decrease of 0.5%. Orders for durable goods fell 1.2% in June, revised down from 1.0% estimated a week ago. Orders for nondurable goods fell 1.3% in June. Orders fell a revised 1.8% in May, down from the prior estimate of a 1.4% drop.

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 116 (0.65%) at Rs 17,978 per ten grams. Prices rose to a high of Rs 17,988 per 10 grams and fell to a low of Rs 17,888 per 10 grams during the day's trading.

At the MCX, silver prices for September delivery closed Rs 112 (0.4%) higher at Rs 29,102/Kg. Prices opened at Rs 29,049/kg and rose to a high of Rs 29,139/Kg during the day's trading.