Precious metals end modestly higher

Prices pare some gains as US consumer sentiment shows a drop

Precious metals ended modestly higher on Friday, 17 September 2010 at Comex. Yellow metal prices struck new record and silver also ended at fresh 30 month high after a volatile day of trading.



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 Friday, gold for December delivery ended at $1,273.8 an ounce, higher by $3.7 (0.3%) on the New York Mercantile Exchange. This was by far an all time highest finish for the yellow metal. For the week, gold ended higher by 2.5%. It was the fifth weekly gains for gold in past six weeks.

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 17.6%.

On Friday, December Comex silver futures ended higher by 4 cents (0.25%) to $20.82. It was a thirty-month high price for silver. For the week, silver ended higher by 3.5%. 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 18.7%.

As per latest reports, central banks across the world are expected to buy about 15 metric tons of gold this year.

In the currency market on Friday, the dollar index, which measures the strength of the dollar against a basket of six other currencies erased earlier losses and climbed up.

Among economic reports expected for the day, The Labor Department in US reported on Friday, 17 September 2010 that the consumer price index increased 0.3% in August, led by higher energy and shelter costs. The increase matched expectations. However, core prices, which exclude volatile food and energy costs were flat, below the 0.1% gain expected. Energy prices increased 2.3% in August, marking the second straight month of 2% plus gains. Food prices rose 0.2%, the largest gain since April.

Gold also pared some of its gains after reports showed that U.S. consumer sentiment fell in September, according to media reports of a survey released by Reuters and the University of Michigan. The UMich index declined to 66.6 in September - the lowest level since August 2009 from 68.9 in August. Market had expected a September reading of 70.

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.