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Thursday, December 24, 2009

Precious metals gather shine

Prices rise as weak economic data weighs on the dollar 


Bullion metal prices went up on Wednesday, 23 December 2009. Prices rose as the dollar fell following a set of disappointing economic data.

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 February delivery ended at $1,094 an ounce, higher by $7.3 (0.7%) an ounce on the New York Mercantile Exchange. Earlier this week, gold fell below the $1,100 level for first time in more than one and half months. Gold prices have been hammered since December as the dollar had firmed up. Last week, gold shed 1.1%. The metal fell for three straight weeks.

Gold ended November 2009 higher by 13%. Before that, for the third quarter it ended higher by 8.7%. For the second quarter, gold ended higher by 0.5%. The metal had gained 4.3% in the first quarter of this year. On a year to date basis, gold price is higher by 25.1%.

On Wednesday, December Comex silver futures ended higher by 16 cents (0.9%) at $17.19 an ounce. Last week, silver registered marginal fall. The metal has gained 52.2% this year until date.

In the currency market on Wednesday, the dollar index, which weighs the strength of dollar against the basket of six other currencies fell by almost 0.7%.

The Commerce Department in US reported on Wednesday, 23 December, 2009 that sales of new homes fell 11.3% in November to a seasonally adjusted annual rate of 355,000 as the popular tax break for first-time homeowners was set to expire. It was the lowest sales pace since April.

Separately, the University of Michigan survey of consumers in US reported on Wednesday, 23 December, 2009 that U.S. consumer confidence rose in December, as Americans said that the outlook for the economy and employment were somewhat better. The number was weaker than expected, however, and worse than a prior reading.

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

At the MCX, gold prices for February delivery closed lower by Rs 105 (0.62%) at Rs 16,600 per ten grams. Prices rose to a high of Rs 16,714 per 10 grams and fell to a low of Rs 16,447 per 10 grams during the day's trading.

At the MCX, silver prices for March delivery closed Rs 27 (0.1%) higher at Rs 27,004/Kg. Prices opened at Rs 26,926/kg and rose to a high of Rs 27,093/Kg during the day's trading.
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