Precious metals shed glaze

Prices witness first weekly losses almost in a month

Precious metal prices turned lower on Friday, 12 November 2010 at Comex. Prices fell despite the dollar index slipping. Prices fell on reports that China is preparing for an interest-rate increase to counter rising inflation.



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 Friday, gold for December delivery ended at $1,365.5 an ounce, lower by $37.8 (2.8%) on the New York Mercantile Exchange. During intra day trading, prices fell to a low of $1,359.3. For the week, the yellow metal lost 2.3%. It was first weekly loss for gold in three weeks.

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.

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 26.7%.

On Friday, December Comex silver futures ended lower by $1.46 (5.3%) at $25.94. Silver's trading volume on Comex had hit a record level on last Tuesday and prices reached thirty-year high figure. Prices then dropped after minimum maintenance margin requirements for silver reportedly went to $6,500 from $5,000 per contract. Prices shed 3.1% for the week, the first loss in four weeks.

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 59.6%.

China reported last Thursday that its inflation rose 4.4%, its highest in two years.

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

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.