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Friday, September 04, 2009

Precious metals at six month high

Drop in initial claims pushes dollar lower

Precious metal prices ended substantially higher once again on Thursday, 03 September, 2009. Prices rose as the dollar dropped following the initial claims report announced by the Labor Department today.

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.

On Thursday, gold for December delivery ended at $997.7, higher by $19.2 (2%) an ounce on the New York Mercantile Exchange. It rose as high as $999.5 earlier. Last week, gold ended higher by almost 0.4%. Year to date, gold prices are higher by 13.4%.

Gold ended August, 2009 higher by 0.2%. Before this, for the second quarter, gold ended higher by 0.5%. The metal had gained 4.3% in the first quarter of this year.

On 17 March, 2008 prices had skyrocketed to a high of $1,034/ounce. But prices have dropped somewhat (3%) since then.

On Thursday, Comex silver futures for September delivery rose by 92.5 cents (6%) to $16.29 an ounce. Last week, silver ended higher by 4.3%.

Silver ended 7.1% higher for August, 2009. For second quarter, silver rose 4.5%. Year to date, silver has climbed 41.5% this year. For 2008, silver had lost 24%.

In the currency market on Thursday, the dollar index, which weighs the strength of dollar, against a basket of six other currencies ended slid by 0.7%. The dollar moved lower against the euro and the British pound but remained higher against the Japanese yen.

Among economic reports expected on Thursday, The Labor Department reported on Thursday, 03 September, 2009 that the number of people filing for state unemployment benefits for the first time fell by 4,000 to a seasonally adjusted 570,000 last week.

Initial claims have held in a fairly narrow range for the past seven weeks, down about 100,000 from the peak in March but still well above levels seen in a healthy economy.

In 2008, gold prices ended higher by 5.5%. The dollar index had gained 12% that year.

At the MCX, gold prices for October delivery closed higher by Rs 252 (1.62%) at Rs 15,771 per 10 grams. Prices rose to a high of Rs 15,806 per 10 grams and fell to a low of Rs 15,464 per 10 grams during the day's trading.

At the MCX, silver prices for December delivery closed Rs 1,185 (4.74%) higher at Rs 26,138/Kg. Prices opened at Rs 24,968/kg and rose to a high of Rs 26,250/Kg during the day's trading.

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