Precious metals take a step back

Rising dollar and profit booking push back prices

Precious metals ended lower on Thursday, 13 October 2011 at Comex. Prices turned pale as traders resorted to profit booking following previous sessions' gains. A rising dollar also hammered prices. Better than expected economic data at Wall Street also took some shine away from precious metals. A day earlier, hopes for a plan to recapitalize European banks and an expanded European bailout fund led to gains in gold and other metals.



Gold for December delivery fell $14.1 or 0.8%, to end at $1,668.5 an ounce on the Comex division of the New York Mercantile Exchange on Thursday. 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 shed $1.12 (3.4%) to end at $31.67. For the month of September, silver shed 28%. It registered a drop of 14% for the third quarter ending September.

The Labor Department reported today that initial jobless claims inched down by 1,000 last week to 404,000. Market was expected a figure around 406,000. Initial claims from two weeks ago were revised up to 405,000 from an original reading of 401,000. The average of new claims over the past four weeks fell by 7,000 to stand at 408,000, marking the lowest level since mid-August. The monthly average is seen as a more accurate gauge of labor trends because it smooths out volatility in the week-to-week data.

In another report, government data showed that the U.S. trade deficit remained virtually unchanged in August but the U.S. still managed to post a record monthly trade gap with China. The nation's trade deficit held steady at $45.6 billion in August from the prior month. The trade gap in July was revised up from the initial estimate of $44.8 billion. After two months of deficits above $50 billion, the trade gap narrowed in July by 11.4%. This is the largest percentage decline since May 2009.

In the currency market on Thursday, the dollar index, which measures the strength of the dollar against a basket of six other currencies, ended higher by 0.3%.

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 lower by Rs 115 (0.42%) at Rs 26,749 per ten grams. Prices rose to a high of Rs 26,870 per 10 grams and fell to a low of Rs 26,620 per 10 grams during the day's trading.

At the MCX, silver prices for December delivery closed lower by Rs 1,248 (2.3%) at Rs 52,914/Kg. Prices opened at Rs 54,110/kg and fell to a low of Rs 52,523/Kg during the day's trading.