Precious metals on a roll

Yellow metal closes little shy of $1,300 mark

Precious metals continued to strike new highs even on Thursday, 23 September 2010 at Comex. Yellow metal prices struck new record for the fifth consecutive session. Silver also shone for the second consecutive day at its three-decade highest level. Prices rose as the latest initial claims data disappointed.



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. But bullion metals have registered increase in prices despite strong dollar in recent times and vice versa.

On Thursday, gold for December delivery ended at $1,296.3 an ounce, higher by $4.2 (0.3%) on the New York Mercantile Exchange. Prices closed a little shy of $1,300 level for the second consecutive day. This was by far an all time highest finish for the yellow metal. Last 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 20.3%.

On Thursday, December Comex silver futures ended higher by 16 cents (0.8%) at $21.21. It was once again an all time high close for silver prices in three decades. Last 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 20.8%.

The Labor Department in US reported on Thursday, 23 September 2010 that the number of people who filed new claims for unemployment benefits jumped 12,000 to 465,000 in the week ended 18 September 2010. Market had expected initial claims to rise to a seasonally adjusted 455,000.

The report detailed that the four-week average of initial claims, which is less volatile than the weekly number, dipped 3,250 to 463,250, the lowest level since the end of July. Continuing claims fell 48,000 to 4,49 million. New claims had dropped two straight weeks before this, but part of the decline stemmed from a disruption in the government's data collection caused by the Labor Day holiday in early September. Claims often rise after the holiday.

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 5 (0.02%) at Rs 19,190 per ten grams. Prices rose to a high of Rs 19,245 per 10 grams and fell to a low of Rs 19,158 per 10 grams during the day's trading.

At the MCX, silver prices for December delivery closed Rs 137 (0.42%) higher at Rs 32,561/Kg. Prices opened at Rs 32,465/kg and rose to a high of Rs 32,610/Kg during the day's trading.