Mixed end for bullion metals

Gold stays a little shy of $1,200 mark

Bullion metal prices ended mixed on Wednesday, 04 August 2010 at Comex. Gold prices rose and crossed the $1,200 mark during intra day trading. Silver prices dropped though.



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 Wednesday, gold for December delivery ended at $1,195.9 an ounce, higher by $8.4 (0.7%) on the New York Mercantile Exchange. During intra day trading, prices touched a high of $1,205.6. Prices rose for six 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 9.9%.

On Wednesday, September Comex silver futures ended lower by 14 cents (0.8%) at $18.28 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 3.7%.

In the currency market on Wednesday, the dollar index, which tracks the strength of dollar against a basket of six other currencies, rose by 0.4%.

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

Among the economic data expected for the day, Institute for Supply Management's report on the service sector came in higher than expected. The index rose 54.3 in July, from 53.8 in June.

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 121 (0.7%) at Rs 18,072 per ten grams. Prices rose to a high of Rs 18,149 per 10 grams and fell to a low of Rs 17,990 per 10 grams during the day's trading.

At the MCX, silver prices for September delivery closed Rs 181 (0.6%) lower at Rs 28,961/Kg. Prices opened at Rs 29,200/kg and fell to a low of Rs 28,776/Kg during the day's trading.