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Thursday, September 03, 2009

Precious metals at three month high

Weak job report imparts shine to precious metals

Precious metal prices ended substantially higher on Wednesday, 02 September, 2009. Prices rose as the dollar dropped following a disappointing private sector job report thereby increasing the appeal of precious metals as a safe haven against other investment alternatives.

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 Wednesday, gold for December delivery ended at $978.5, higher by $22 (2.3%) an ounce on the New York Mercantile Exchange. It rose as high as $981.4 earlier. Last week, gold ended higher by almost 0.4%. Year to date, gold prices are higher by 11.4%.

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 (5%) since then.

On Wednesday, Comex silver futures for September delivery rose by 30.5 cents (2%) to $15.365 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 35.5% this year. For 2008, silver had lost 24%.

In the currency market on Wednesday, the dollar index, which weighs the strength of dollar, against a basket of six other currencies ended slid by 0.5%.

Among economic reports expected on Wednesday, a private sector payrolls report indicated that employment in the U.S. private sector fell by 298,000 in August.

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 316 (2.1%) at Rs 15,519 per 10 grams. Prices rose to a high of Rs 15,546 per 10 grams and fell to a low of Rs 15,180 per 10 grams during the day's trading.

At the MCX, silver prices for December delivery closed Rs 461 (1.9%) higher at Rs 24,953/Kg. Prices opened at Rs 24,410/kg and rose to a high of Rs 25,101/Kg during the day's trading.

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