Precious metals zoom up

Prices shine following some hopes for a resolution of European debt crisis

Precious metals ended substantially higher on Wednesday, 12 October 2011 at Comex. A depressed dollar pushed up prices of bullions, which also shone following some hopes for a resolution of European debt crisis.

Gold for December delivery rose $21.6 or 1.3%, to end at $1,682.6 an ounce on the Comex division of the New York Mercantile Exchange on Wednesday. Prices rose to a high of $1,693.9 and fell to a low of $1,662 during intra day trading. For the month of September, gold shed 11%. It registered a rise of 8% for the third quarter ending September.



Gold prices also moved up as recent data from the U.S. Commodity Futures Trading Commission showed that fund managers have started to modestly move back to gold.

On Wednesday, silver prices for December delivery rose $0.79 (2.5%) to end at $32.79. For the month of September, silver shed 28%. It registered a drop of 14% for the third quarter ending September.

US stocks pared early weakness and were trading higher today. Its strength came largely in response to improved confidence in Europe, where officials have recently made a stronger commitment to shore up the region's financial system and even recapitalize its banks. That has helped reduce the perception of risk related to the European portfolios owned by diversified banks and financial services firms. In addition, Slovakia's political parties reached an agreement that will allow the nation's parliament to approve enhancements to the Europe's bailout fund.

In the currency market on Wednesday, the dollar index, which measures the strength of the dollar against a basket of six other currencies, ended lower by 0.55%.

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 200 (0.75%) at Rs 26,864 per ten grams. Prices rose to a high of Rs 27,008 per 10 grams and fell to a low of Rs 26,746 per 10 grams during the day's trading.

At the MCX, silver prices for December delivery closed higher by Rs 893 (1.7%) at Rs 54,162/Kg. Prices opened at Rs 53,450/kg and rose to a high of Rs 54,498/Kg during the day's trading.