Precious metals zoom up

Prices brighten as dollar falters

Precious metals ended substantially higher on Monday, 10 October 2011 at Comex. Prices rose as investors turned their focus back to commodities and the US dollar dropped considerably lower.

Gold for December delivery rose $35 or 2.1%, to end at $1,670.8 an ounce on the Comex division of the New York Mercantile Exchange on Monday. Prices rose to a high of $1,676.7 during intra day trading. For the month of September, gold shed 11%. It registered a rise of 8% for the third quarter ending September.



On Monday, silver prices for December delivery rose $0.99 (3.2%) to end at $31.98. For the month of September, silver shed 28%. It registered a drop of 14% for the third quarter ending September.

U.S. stocks rallied substantially higher on Monday, 10 October 2011 as France and Germany pledged to do everything necessary to support Europe's banks, while investors also looked ahead to the unofficial kickoff of third-quarter earnings season. The French and German comments gave investors some relief that European officials may take bigger steps deemed necessary to control the region's sovereign-debt crisis, making them more willing to move into riskier assets like stocks, commodities and the euro, which rallied on the U.S. dollar.

In the currency market on Monday, the dollar index, which measures the strength of the dollar against a basket of six other currencies, ended lower by 1.6%. Most of the dollar's downturn was due to the euro's rally following the commitment of France's Sarkozy and Germany's Merkel to shoring up eurozone banking outfits.

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 313 (1.2%) at Rs 26,663 per ten grams. Prices rose to a high of Rs 26,699 per 10 grams and fell to a low of Rs 26,427 per 10 grams during the day's trading.

At the MCX, silver prices for December delivery closed higher by Rs 731 (1.4%) at Rs 53,028/Kg. Prices opened at Rs 52,603/kg and rose to a high of Rs 53,535/Kg during the day's trading.