Bullion metals glitter

Prices register substantial gains for the month of August

Precious metals ended higher on Tuesday, 31 August 2010 at Comex. Concerns about economic recovery increased the appeal of precious metals as an alternate investment. Prices registered substantial gains for the month of August.



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 $1,250.3 an ounce, higher by $11.9 (0.9%) on the New York Mercantile Exchange. It was highest close for gold in two months. 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 14.6%.

On Tuesday, September Comex silver futures ended higher by 36 cents (1.9%) to $19.43. It was highest close for silver in three months. 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 10.1%.

US stocks extended their bounce off the morning low amid news that the Conference Board's Consumer Confidence Index increased more than expected to 53.5 from 51.0. That overshadowed a disappointing Chicago PMI, which came in at 56.7 for August.

The Conference Board's present-situation index fell to 24.9 in August from 26.4 in July. Those saying present business conditions are "good" fell to 8.7% in August from 8.8% in July, while those saying jobs are "hard to get" rose to 45.7% from 45.1%. The expectations index rose to 72.5 in August from 67.5 in July. Those expecting "better" business conditions in six months rose to 17% from 15.8%, while those expecting more jobs rose to 14.6% from 14.2%.

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 201 (1.06%) at Rs 19,134 per ten grams. Prices rose to a high of Rs 19,147 per 10 grams and fell to a low of Rs 18,920 per 10 grams during the day's trading.

At the MCX, silver prices for December delivery closed Rs 519 (1.7%) higher at Rs 30,887/Kg. Prices opened at Rs 30,342/kg and rose to a high of Rs 30,925/Kg during the day's trading.