Bullions gain back the luster they shed prior session

Prices end at almost session highs following inflation fears and weak economic data

Precious metals ended higher on Tuesday, 22 November 2011 at Comex. Bullions ended U.S. day session higher and nearer the daily high on Tuesday due to inflation fears following the day's economic report. Precious metals saw bargain hunting and short covering following the strong selling pressure seen the day before. A generally higher commodity market sector on Tuesday was also bullish for the metals.



Gold for December delivery ended higher by $23.8 or 1.4%, to end at $1,702.4 an ounce on the Comex division of the New York Mercantile Exchange on Tuesday. It rose to a high of $1,706.4 during intra day trading. Last week, the yellow metal lost 3.5%. For the month of October, gold gained 6.3%. It registered a rise of 8% for the third quarter ending September.

Gold prices briefly pared gains immediately following the release of minutes of the Federal Open Market Committee's last monetary policy meeting. According to the minutes, there isn't enough support as yet for the Federal Reserve to adopt a formal inflation target even as the central bank is moving toward providing more guidance on where its interest rates will be in the future. Gold, which is seen as a hedge against inflation, was trading near the session's high just prior to the release of the Fed meeting minutes.

On Tuesday, silver prices for December delivery rose $1.84 or 5.9% to end at $32.95. Last week, silver lost 4.9%. For the month of October, silver gained 14%. It registered a drop of 14% for the third quarter ending September.

The Commerce Department in US reported today that the U.S. economy grew at a slower pace than originally estimated in the third quarter, mainly because companies reduced inventories and did not invest as much. The Commerce Department cut its estimate of gross domestic product to 2.0% from a first reading of 2.5%. The government' second revision of GDP includes data not fully available earlier, such inventory levels and trade data. As a result, it paints a more accurate picture of U.S. growth. Market had expected the government to trim its estimate to 2.3%.

In the currency market on Tuesday, the Dollar Index, which weighs the strength of dollar against basket of six other currencies ended marginally lower by 0.01%.

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 December delivery closed higher by Rs 353 (1.2%) at Rs 28,799 per ten grams. Prices rose to a high of Rs 28,820 per 10 grams and fell to a low of Rs 28,470 per 10 grams during the day's trading.

At the MCX, silver prices for December delivery closed higher by Rs 2,639 (4.8%) at Rs 57,052/Kg. Prices opened at Rs 54,523/kg and rose to a high of Rs 57,180/Kg during the day's trading.