Bullion metals trade in narrow band

Gold turns pale but silver shines

Precious metals ended mixed once again on Wednesday, 08 September 2010 at Comex. Gold prices dropped but silver rose. Prices traded within narrow band as banking worries once again faded in the European region. Prices ended mixed despite a weak dollar.



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 $1,257.5 an ounce, lower by $1.8 (0.1%) on the New York Mercantile Exchange. Earlier, it fell to a low of $1,254.6. Yesterday, prices had marked a new high. Last week, gold ended higher by 1%, up for fifth 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 15.8%.

On Wednesday, December Comex silver futures ended higher by 10 cents (0.5%) to $20.01. Last week, silver ended higher by 3.8%. 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 13.7%.

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

The latest Beige Book from the Fed was released today. It indicated that five western districts reported modest growth, while a limited number of eastern districts saw improvement and some Midwestern districts saw mixed data. The Beige Book also indicated that consumer caution has governed discretionary purchases, but that consumer spending has increased, on balance.

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 lower by Rs 63 (0.3%) at Rs 19,106 per ten grams. Prices rose to a high of Rs 19,207 per 10 grams and fell to a low of Rs 19,073 per 10 grams during the day's trading.

At the MCX, silver prices for December delivery closed Rs 55 (0.2%) higher at Rs 31,512/Kg. Prices opened at Rs 31,479/kg and rose to a high of Rs 31,720/Kg during the day's trading.