Precious metals continue to add glaze

Prices extend gains for fifth straight day

Precious metals ended higher for fifth consecutive day on Thursday, 27 October 2011 at Comex. Prices shone as the dollar weakened and traders cheered the latest plan of euro zone to contain its sovereign debt crisis.

Gold for December delivery ended higher by $24.2 or 1.4%, to end at $1,747.7 an ounce on the Comex division of the New York Mercantile Exchange on Thursday. It was highest close for gold in five weeks. Last week, gold lost 2.8%, erasing all of its prior week's gains. For the month of September, gold shed 11%. It registered a rise of 8% for the third quarter ending September.



On Thursday, silver prices for December delivery rose $1.8 or 5.4% to end at $35.11. Last week, silver shed 3%. For the month of September, silver shed 28%. It registered a drop of 14% for the third quarter ending September.

Leaders from the European Union addressed uncertainty and frustration related to their ability to create a comprehensive plan aimed at improving financial conditions in their continent by increasing the eurozone bailout fund to about $1.4 trillion, recapitalizing banks, and agreeing to implement 50% haircut on Greece's debt obligations. The news spurred a concerted buying effort that caused US stocks to surge in broad fashion on Thursday.

In the currency market on Thursday, the Dollar Index, which weighs the strength of dollar against basket of six other currencies fell by almost 1.2%.

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.

Latest data in US showed some pleasing GDP data this morning. An advance reading showed that the U.S. economy grew at a 2.5% clip during the third quarter. That exceeded the 2.3% growth rate that had been broadly expected to follow the 1.3% increase posted in the prior quarter. As for weekly initial jobless claims, they remained narrowly above 400,000, as had been expected.