Bullion metals close little shy of record highs

Prices glitter as economic data increase their appeal

Precious metals ended higher on Thursday, 02 September 2010 at Comex. Prices almost touched their record high as economic data once again increased the appeal of precious metals as an alternate investment.



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 $1,253.4 an ounce, higher by $5.3 (0.4%) on the New York Mercantile Exchange. It was a little shy of touching the all time record high of $1,258.3. Last week, gold ended higher by 0.7%, up for fourth consecutive week.

Gold ended the month of August 2010 higher by 5.6% after ending July lower by 5%. It was the worst monthly loss for gold since December 2009. 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 15%.

On Thursday, December Comex silver futures ended higher by 28 cents (1.4%) to $19.67. It was silver's highest close since March 2008, when it closed at 19.89 an ounce. Last week, silver ended higher by 5.8%. For the month of August, silver ended higher by 8%. In 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 11.5%.

The National Association of Realtors reported on Thursday, 02 September 2010 that pending home sales in July rose 5.2% from downwardly revised June levels. The July index came in better than the 1% monthly drop that market had forecast, though sales in July were nonetheless 19.1% below those during the same month in 2009.

Government report in US showed on Thursday, 02 September 2010 that the productivity of American businesses fell a revised 1.8% in the second quarter, the biggest drop in almost four years and twice as much as the government initially reported. Productivity is defined as real output divided by hours worked.

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 43 (0.22%) at Rs 19,043 per ten grams. Prices rose to a high of Rs 19,088 per 10 grams and fell to a low of Rs 19,002 per 10 grams during the day's trading.

At the MCX, silver prices for December delivery closed Rs 308 (1%) higher at Rs 31,056/Kg. Prices opened at Rs 30,720/kg and rose to a high of Rs 31,155/Kg during the day's trading.