Precious metals add some gains

Prices rise despite a strong dollar amid G20 meeting

Precious metal prices ended higher once again on Thursday, 11 November 2010 at Comex. Prices rose despite the strong dollar amid the ongoing G20 meet at Seoul. Precious metals have been striking new records since past few days trended following last week's confirmation of a new round of quantitative easing. Yesterday, reports of tighter margin requirement for silver pricing acted as the dampener for the recent upsurge in bullion metal prices.



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 $1,403.3 an ounce, higher by $4 (0.3%) on the New York Mercantile Exchange. During intra day trading, prices rose to a high of $1,419.5.

Gold has surged to records since late August on expectations that Federal Reserve efforts at monetary stimulus will depress the dollar, making gold more valuable as an alternative store of wealth. Precious metals are also benefiting from safe-haven appeal as worries about European debt, particularly Irish bonds, have resurfaced.

Gold ended the month of October 2010 higher by 3.8%. Before this, it ended 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 29.5%.

On Thursday, December Comex silver futures ended higher by $0.54 (2%) at $27.41. Silver's trading volume on Comex had hit a record level on Tuesday. Prices dropped yesterday after minimum maintenance margin requirements for silver reportedly went to $6,500 from $5,000 per contract.

For the month of October, silver gained 13%, its third consecutive monthly gain. In 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 64.9%.

In the currency market on Thursday, the dollar index, which measures the strength of the dollar against a basket of six other currencies, ended higher by 0.6%.

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 138 (0.7%) at Rs 20,371 per ten grams. Prices rose to a high of Rs 20,485 per 10 grams and fell to a low of Rs 20,260 per 10 grams during the day's trading.

At the MCX, silver prices for December delivery closed Rs 690 (1.7%) higher at Rs 40,589/Kg. Prices opened at Rs 40,190/kg and rose to a high of Rs 41,110/Kg during the day's trading.