Mixed finish for precious metals

Silver rises due to anticipation of higher demand for the industrial metal

Precious metals ended mixed on Wednesday, 15 September 2010 at Comex. Gold prices retreated while silver rose. Prices remained a bit volatile as the dollar index went up. Silver rose due to anticipation of higher demand for the industrial metal.



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 $1,268.7 an ounce, lower by $3 (0.2%) on the New York Mercantile Exchange. Yesterday, prices had struck a new all time new record at $1,271.7. Last week, gold ended lower by 0.4%.

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 16.9%.

On Wednesday, December Comex silver futures ended higher by 14 cents (0.7%) to $20.57. It was a thirty-month high price for silver. Last week, silver ended lower by 0.5%. 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 17.5%.

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

Among economic reports expected for the day, participants shrug off a disappointing September Empire Manufacturing Index, which slipped to 4.1 from 7.1. It had been expected that it would come in at 6.4. Import prices heated up in August with a 0.6% monthly increase. They had increased just 0.1% in the prior month.

Among other reports, industrial production increased 0.2% in August, but the consensus called for a slightly stronger hike of 0.3% after a 0.6% increase in the prior month. Capacity utilization in August was 74.7%, not too different than the 75% that was widely forecasted.

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 56 (0.3%) at Rs 19,139 per ten grams. Prices rose to a high of Rs 19,257 per 10 grams and fell to a low of Rs 19,107 per 10 grams during the day's trading.

At the MCX, silver prices for December delivery closed Rs 144 (0.5%) higher at Rs 32,108/Kg. Prices opened at Rs 31,972/kg and rose to a high of Rs 32,220/Kg during the day's trading.