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Wednesday, November 24, 2010

Precious metals end higher

Prices add some glaze and European debt problems continue 

Precious metals ended higher on Monday, 22 November 2010 at Comex. Prices rose as European sovereign debt problems persisted increasing the appeal of bullion metals. Prices rose despite a strong dollar. 

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. 

On Monday, gold for December delivery ended at $1,357.8 an ounce, higher by $5.5 (0.4%) on the New York Mercantile Exchange. During intra day trading, earlier it fell to a low of $1350.9. Last week, gold lost 1%. It was second consecutive weekly loss for gold in four weeks. 

Gold has surged to records since late August on expectations that Federal Reserve efforts at monetary stimulus will depress the dollar, making gold more valuable as an alternative store of wealth. 

Gold ended the month of October 2010 higher by 3.8%. Before this, it ended September 2010 and the third quarter higher by 5%. It was eighth consecutive quarterly gain for gold. For the second quarter, gold ended up by 12%. For the first quarter of this year, gold rose by 1.7%. On a year to date basis, gold is higher by 25.4%. 

On Monday, December Comex silver futures ended higher by $0.28 (1%) at $27.46. Prices gained 4.8% last week. 

For the month of October, silver gained 13%, its third consecutive monthly gain. In September, silver ended higher by 12%. For the third quarter, silver gained nearly 18%. For the second quarter, silver ended higher by 3.1%. For the first quarter of this year, silver rose by 3%. On a year to date basis, silver is higher by 59.6%. 

Officials from Ireland announced during the weekend a request for financial aid from the European Union as part of an effort to sturdy its tenuous financial state. Nothing official has been put forth, but most estimates point toward a plan that will feature something on the order of 100 billion euros. 

As per a latest report from a investment firm, silver is likely to average $19.94 in 2010, a 36% increase on the year and is to trade at more than $30 an ounce in 2011. 

The report also said that demand for silver is set to rise by 10% this year as a recovery in industrial uses, record coin demand and slight growth in jewelry offtake easily counter losses in photography and silverware fabrication. Global investment in silver is set to reach a record of $4 billion this year. 

The World Gold Council reported during last week that demand for gold continued to be strong in the third quarter. Demand hit 922 metric tons in the third quarter, a 12% increase from the year-ago period. Demand for gold jewelry increased 8% in the same period. Retail investment rose 25% to 243 metric tons, as investors snapped up gold bars. 

Gold had ended FY 2009 higher by 24%. Silver futures had ended 2009 up 50%. The dollar index had lost 4.2% against its counterparts last year. 

At the MCX, gold prices for December delivery closed higher by Rs 38 (0.19%) at Rs 20,140 per ten grams. Prices rose to a high of Rs 20,156 per 10 grams and fell to a low of Rs 20,015 per 10 grams during the day's trading. 

At the MCX, silver prices for December delivery closed Rs 293 (0.7%) higher at Rs 41,763/Kg. Prices opened at Rs 41,600/kg and rose to a high of Rs 42,078/Kg during the day's trading.
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