Precious metals strike all time new high

Murky data and lower dollar impart the shine

Precious metals ended at record highs on Thursday, 16 September 2010 at Comex. Prices struck new record as dollar retreated. Murky economic data also led to higher bullion metal prices today.



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 Thursday, gold for December delivery ended at $1,273.8 an ounce, higher by $5.1 (0.4%) on the New York Mercantile Exchange. This was by far an all time highest finish for the yellow metal. Before this, last Tuesday, prices had struck a 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 17.3%.

On Thursday, December Comex silver futures ended higher by 20 cents (1%) to $20.77. 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 18.5%.

In the currency market on Thursday, the dollar index, which measures the strength of the dollar against a basket of six other currencies fell by 0.3%.

Among economic reports expected for the day, The Labor Department in US reported on Thursday, 16 September 2010 that the number of people who filed new claims for unemployment benefits dipped 3,000 to 450,000 in the latest week. Market had expected initial claims to rise to 460,000 in the week ended 11 September. Claims for last week were revised up by 2,000 to 453,000. The four-week average of initial claims, which is less volatile than the weekly number dropped 13,500 to 464,750.

Traders paid less attention to the August Producer Price Index, which increased 0.4% after a 0.2% increase in the prior month. It was widely expected to climb 0.3% in August. Excluding food and energy, producer prices increased 0.1%, as expected, after a 0.2% increase in the prior month.

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 32 (0.17%) at Rs 19,171 per ten grams. Prices rose to a high of Rs 19,230 per 10 grams and fell to a low of Rs 19,088 per 10 grams during the day's trading.

At the MCX, silver prices for December delivery closed Rs 236 (0.73%) higher at Rs 32,344/Kg. Prices opened at Rs 32,140/kg and rose to a high of Rs 32,375/Kg during the day's trading.