Precious metals trade near flat line

Precious metals demand remain strong in third quarter

Precious metals ended mixed on Wednesday, 17 November 2010 at Comex. Silver ended marginally higher while gold ended marginally lower. Prices took advantage of the weak dollar. Prices also remained higher as reports indicated that physical demand for gold remained steady in the third quarter period.



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 Wednesday, gold for December delivery ended at $1,336.1 an ounce, lower by $2.3 (0.2%) on the New York Mercantile Exchange. It spent oscillating between red and green territory for full time. But in terms of range, prices remained near the flat line for the entire day. Last 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 24%.

On Wednesday, December Comex silver futures ended higher by 28 cents (1.1%) at $25.51. Silver's trading volume on Comex had hit a record level last week 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% last 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 57.3%.

The World Gold Council reported today that demand for gold continued to be strong in the third quarter. Demand hit 922 metric tons in the third quarter, a 12% increase from the year-ago period. Demand for gold jewelry increased 8% in the same period. Retail investment rose 25% to 243 metric tons, as investors snapped up gold bars.

In the currency market on Wednesday, the dollar index, which measures the strength of the dollar against a basket of six currencies fell 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.