Bullion metals end mixed once again

Weak economic data pull up gold

Bullion metal prices ended mixed once again on Thursday, 19 August 2010 at Comex. Gold prices ended marginally higher while silver prices slipped. Gold prices rose as weak economic data increased the appeal of commodities as a hedge against inflation. On the other hand, silver dropped as dollar strengthened.



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 December delivery ended at $1,235.4 an ounce, higher by $4 (0.3%) on the New York Mercantile Exchange. During intra day trading, prices rose to a high of $1,239.5. Last week, gold ended higher by 0.9%.

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 13.3%.

On Thursday, September Comex silver futures ended lower by 7 cents (0.4%) at $18.33 an ounce. Last week, silver ended lower by 2%. 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 3.1%.

In the currency market on Thursday, the dollar index, which weighs the strength of the dollar against a basket of six other currencies erased earlier gains and climbed up.

The Labor Department in US reported on Thursday, 19 August 2010 that first-time filings for state unemployment benefits rose unexpectedly last week to reclaim the highest level since the middle of last November. As per the report, initial claims rose 12,000 to 500,000 for the week ended 14 August 2010.

Claims had fallen as low as the 427,000 level in mid-July but have worsened steadily since and now have increased for three straight weeks. Meanwhile, the latest four-week moving average for initial claims rose 8,000 to stand at 482,500. This is the highest level since December 2009.

In addition to this, the surprisingly weak Philly Fed report, as well as a simultaneously released leading economic indicators report combined to rattle U.S. stocks on Thursday.

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 October delivery closed higher by Rs 102 (0.5%) at Rs 18,775 per ten grams. Prices rose to a high of Rs 18,790 per 10 grams and fell to a low of Rs 18,645 per 10 grams during the day's trading.

At the MCX, silver prices for September delivery closed Rs 26 (0.08%) lower at Rs 29,274/Kg. Prices opened at Rs 29,325/kg and fell to a low of Rs 29,141/Kg during the day's trading.