Bullions shed some luster

Gold and silver end in the red as investors turn cautious

Precious metals managed to pare their losses partly but ultimately ended in the red on Wednesday, 16 November 2011 at Comex. Prices remained a bit somber as investors remained a bit cautious and dollar ended flat. Gold steadied itself, however, after the dollar lost ground against the euro and U.S. stocks erased losses during mid session hours.

Gold for December delivery ended lower by $7.9 or 0.4%, to end at $1,774.3 an ounce on the Comex division of the New York Mercantile Exchange on Wednesday. Last week, gold gained 1.8%. For the month of October, gold gained 6.3%. It registered a rise of 8% for the third quarter ending September.



On Wednesday, silver prices for December delivery shed $0.63 or 1.8% to end at $33.82. Last week, silver gained 1.8%. For the month of October, silver gained 14%. It registered a drop of 14% for the third quarter ending September.

In the currency market on Wednesday, the Dollar Index, which weighs the strength of dollar against basket of six other currencies pared its gains against the euro today and witnessed almost a flat finish.

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.

Wednesday's economic reports had the consumer price index dropped 0.1% in October from the prior month, indicating inflationary pressures could be on the decline. The so-called core rate excluding food and fuel costs climbed 0.1%.

Figures from the Federal Reserve had industrial production climbing 0.7% in October, illustrating the manufacturing sector is participating in economic growth in the final quarter of 2011.

At the MCX, gold prices for December delivery closed lower by Rs 175 (0.6%) at Rs 28,996 per ten grams. Prices rose to a high of Rs 29,168 per 10 grams and fell to a low of Rs 28,804 per 10 grams during the day's trading.

At the MCX, silver prices for December delivery closed lower by Rs 828 (1.4%) at Rs 57,157/Kg. Prices opened at Rs 57,860/kg and fell to a low of Rs 56,880/Kg during the day's trading.