Precious metals glitter

Weak dollar and buying spree keep prices high

Precious metal prices ended substantially higher on Monday, 25 October 2010 at Comex. Drop in dollar and anticipation that gold will be bought in India during first week of November kept prices high on Monday. Last week, gold had registered first weekly loss in six weeks.



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 Monday, gold for December delivery ended at $1,338.9 an ounce, higher by $13.8 (1%) on the New York Mercantile Exchange. During intra day trading, prices rose to a high of $1,349.5. Last week, gold ended lower by 3.4%.

Gold ended the month of September 2010 and the third quarter higher by 5%. It was eighth consecutive quarterly gain for gold. For the second quarter, gold ended up by 12%. For the first quarter of this year, gold rose by 1.7%. On a year to date basis, gold is higher by 22%.

On Monday, December Comex silver futures ended higher by 43 cents (1.8%) at $23.52. Last week, silver ended lower by 4.8%. For the month of September, silver ended higher by 12%. For the third quarter, silver gained nearly 18%. 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 39.8%.

In the currency market on Monday, the dollar index, which weighs the strength of the dollar against a basket of six other currencies fell by almost 0.36%.

The National Association of Realtors reported on Monday, 25 October 2010 that sales of existing homes climbed 10% in September, with a drop in prices helping transactions increase for a second straight month. The report showed that sales rose 10% to a seasonally adjusted annual rate of 4.53 million, from a downwardly revised 4.12 million in August. Market had expected a smaller gain, to 4.39 million.

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.

At the MCX, gold prices for December delivery closed higher by Rs 90 (0.46%) at Rs 19,547 per ten grams. Prices rose to a high of Rs 19,625 per 10 grams and fell to a low of Rs 19,474 per 10 grams during the day's trading.

At the MCX, silver prices for December delivery closed Rs 298 (0.84%) higher at Rs 35,474/Kg. Prices opened at Rs 35,180/kg and rose to a high of Rs 35,758/Kg during the day's trading.