Precious metals stay shiny

Prices rise as dollar weakens

Precious metal prices ended little higher on Monday, 18 October 2010 at Comex. Gold prices ended marginally higher after staying in the red for most of the session. Prices went for a little correction today following their recent rally. The weak dollar also aided in the prices staying steady.



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 $1,372 an ounce, lower by $0.10 (0.01%) on the New York Mercantile Exchange. Earlier in the day, it reached an intra day low of $1,353.2. Last week, gold ended higher by 2%. It was the ninth weekly gains for gold.

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 22.3%.

On Monday, December Comex silver futures ended higher by 13 cents (0.5%) at $24.41. Last week, silver ended higher by 5.1%. 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 41.7%.

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 0.2%.

The Commerce Department in US reported on Monday, 18 October 2010 that U.S. September industrial production unexpectedly fell 0.2% and capacity utilization remained just shy of 75%. Separately, net Long-term Treasury International Capital Flow for August doubled month-over-month to $128.7 billion.

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 December delivery closed higher by Rs 27 (0.13%) at Rs 19,891 per ten grams. Prices rose to a high of Rs 19,899 per 10 grams and fell to a low of Rs 19,676 per 10 grams during the day's trading.

At the MCX, silver prices for December delivery closed Rs 136 (0.4%) higher at Rs 36,410/Kg. Prices opened at Rs 36,150/kg and rose to a high of Rs 36,446/Kg during the day's trading.