Bullions shine following downgrade of US's debt by S&P

Yellow metal strikes all time record high crossing the $1,700 mark

Precious metals scaled to record highs on Monday, 08 August 2011 at Comex. News that Standard & Poor's downgraded US debt last weekend kept stocks under heavy pressure on Monday, 08 August 2011. In turn, the investors tried to escape from equities and flock to bullions, which are seen as much safer and better bets in times of turbulence. Prices rose despite a strong dollar.



Gold for December delivery rose $61.4 or 3.7%, to end at $1,713.2 an ounce on the Comex division of the New York Mercantile Exchange on Monday. During intra day trading, prices rose to a high of $1,721.9. It was all time record high price for the yellow metal. Last week, gold gained 1.3%.

On Monday, silver prices for September delivery rose by $1.17 (3.1%) to end at $39.38. Last week, silver lost 1.4%.

The United States late Friday lost its triple-A debt rating from Standard & Poor's for the first time in history, with the credit-rating agency saying the political system of the world's top economy has become less stable and that budget cutting announced earlier this week didn't go far enough.

S&P lowered its rating on the U.S. by a notch to AA+ and, to compound the embarrassment, said the outlook is negative as well, as it threatened another reduction in two years. The rating agency said the deal reached by lawmakers to cut the federal deficit by an estimated $2.1 trillion over a decade didn't go far enough, and “America's governance and policymaking is becoming less stable, less effective, and less predictable than what was previously believed.

In the currency market on Monday, the dollar index, which measures the strength of the dollar against a basket of six other currencies, rose by almost 0.5%.

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 higher by Rs 591 (2.4%) at Rs 25,242 per ten grams. Prices rose to a high of Rs 25,305 per 10 grams and fell to a low of Rs 24,700 per 10 grams during the day's trading.

At the MCX, silver prices for September delivery closed higher by Rs 809 (1.4%) at Rs 59,188/Kg. Prices opened at Rs 58,770/kg and rose to a high of Rs 60,499/Kg during the day's trading.