Mixed finish for precious metals

Gold ends marginally higher but silver slips

Precious metals ended mixed on Monday, 27 December 2010 at Comex. Gold prices recovered as the dollar fell but silver turned a little pale. Market was closed last Friday tomorrow in observance of Christmas.



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 February delivery rose by $2.9 (0.2%) ending at $1,382.9 an ounce on the New York Mercantile Exchange. Last week, gold ended almost unchanged. In December, gold had struck a new all time high of $1,416.1.

Gold prices had been doing well 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 November higher by 2.1%. It had ended 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 25.5%.

On Monday, December Comex silver futures ended lower by $0.08 (0.3%) at $29.25. Prices gained 0.7% last week. It gained 15% in November.

Before this, 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 73.5%.

In the currency market on Monday, the dollar index, which measures the strength of the dollar against a basket of six other currencies, pared earlier strength and ended down by 0.2%.

At the MCX, gold prices for February delivery closed higher by Rs 32 (0.16%) at Rs 20,511 per ten grams. Prices rose to a high of Rs 20,539 per 10 grams and fell to a low of Rs 20,475 per 10 grams during the day's trading.

At the MCX, silver prices for March delivery closed Rs 50 (0.11%) lower at Rs 44,370/Kg. Prices opened at Rs 44,346/kg and fell to a low of Rs 44,240/Kg during the day's trading.