Bullions lose luster

Prices drop modestly lower as investors return to equities

Precious metals ended modestly lower on Monday, 29 August 2011 at Comex. Prices dropped as investors returned to equities thereby reducing the luster of bullions to some extent. Latest data from the Commerce Department regarding the income and spending of US consumers revived strong hopes of economic turnaround once again. U.S equities opened higher on relief that Hurricane Irene, while deadly, stopped short of creating complete havoc along the East Coast.



Gold for December delivery dropped $6.8 or 0.4%, to end at $1,790.6 an ounce on the Comex division of the New York Mercantile Exchange on Monday. It fluctuated between small gains and losses throughout the day. It rose to a high of $1,841.5 and fell to a low of $1,781.2 during intra day trading. It ended last week lower by 3%. Gold had closed a little shy of $1,900/ounce last week.

On Monday, silver prices for September delivery fell $0.44 (1.1%) to end at $44.51. Last week, silver lost 3.5%.

Financials sector led another broad-based bounce at Wall Street on Monday, 29 August 2011. Buying interest ahead of the open was largely bolstered by positive action in Europe, where news of consolidation in Greece's banking industry was generally regarded as a step toward a more sound banking system in the country.

The Commerce Department in US reported on Monday, 29 August 2011 that savings rate fell in July as spending rose more than income. Americans spent more money than they took in July — largely on auto purchases.

The income of U.S. workers rose 0.3% in July, but spending climbed an even faster 0.8%. The rise in spending matched the increase in February as the largest since summer 2009. Adjusted for inflation, personal spending rose 0.5% last month, compared with a less than 0.1% decline in June.

In the currency market on Monday, the dollar index, which measures the strength of the dollar against a basket of six other currencies, fell by 0.1%.

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.

At the MCX, gold prices for October delivery closed lower by Rs 900 (3.2%) at Rs 26,738 per ten grams. Prices rose to a high of Rs 27,398 per 10 grams and fell to a low of Rs 26,626 per 10 grams during the day's trading.

At the MCX, silver prices for September delivery closed lower by Rs 2,351 (3.7%) at Rs 61,163/Kg. Prices opened at Rs 62,712/kg and fell to a low of Rs 61,024/Kg during the day's trading.