Precious metals end modestly higher

Gold pares earlier losses as US equities slump once again

Precious metals ended somewhat higher on Thursday, 25 August 2011 at Comex. Prices rose once again as US equities slumped giving up their earlier gains. Traders became unnerved once again as news circulated that Germany might be the next to get a debt downgrade. Prices closed higher despite a strong dollar after initial claims data showed an unexpected increase for last week.



Gold for December delivery rose $5.9 or 0.3%, to end at $1,763.2 an ounce on the Comex division of the New York Mercantile Exchange on Thursday. The yellow metal spent most of the day extending losses on news of possible increase in margin requirements. It fell to a low of $1,705.4 during intra-day trading. Gold had struck record high for five times last week and closed a little shy of $1,900/ounce earlier this week.

On Thursday, silver prices for September delivery rose $1.58 (4%) to end at $40.75. Last week, silver gained 8.5%.

Markets are waiting to hear from Federal Reserve Chairman Ben Bernanke, who is scheduled to speak at a gathering of central bankers in Jackson Hole, on Friday. Expectations are growing that Bernanke won't unveil more stimuli, which have also contributed to gold's fall earlier during the day.

US stocks pared earlier gains and slumped on Thursday. Latest initial claims data showed that the number of Americans seeking new jobless benefits rose for the second week in a row as thousands of phone workers at Verizon Communications filed claims. New applications for U.S. unemployment compensation rose 5,000 to 417,000. Market had expected new requests for jobless benefits to total 410,000 in the week of 20 August on a seasonally adjusted basis. Initial claims from two weeks ago were revised up to 412,000 from an original reading of 408,000.

In the currency market on Thursday, the dollar index, which measures the strength of the dollar against a basket of six other currencies, rose by 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 lower by Rs 83 (0.31%) at Rs 26,376 per ten grams. Prices rose to a high of Rs 26,495 per 10 grams and fell to a low of Rs 25,512 per 10 grams during the day's trading.

At the MCX, silver prices for September delivery closed higher by Rs 2,115 (3.5%) at Rs 61,951/Kg. Prices opened at Rs 59,947/kg and rose to a high of Rs 62,200/Kg during the day's trading.