Weak dollar and rising crude help precious metals rise
Gold and silver prices rose for second straight day on Tuesday, 19 August, 2008. prices rose after crude prices went up after a long time and the dollar weakened against its rivals. Traders were back in buying spree after prices fell to new lows last week. Barring these two days, and one day in between, gold and silver prices had registered losses in all the trading sessions in the current month of August, 2008. Silver prices also rose for the day.
Today, Comex Gold for December delivery rose $11.1 (1.4%) to close at $816.8 ounce on the New York Mercantile Exchange. It fell to an intra day low price of $792 earlier. Last week, the yellow metal gave up 8.4%. With today's gain, it has lost 11.3% in August, 2008 till date. On 17 March, 2008 prices had skyrocketed to a high of $1,034/ounce. But prices have dropped significantly (20.6%) since then.
This year, gold prices have lost 2.5% till date as the dollar rallied against the euro. It has lost almost $105 in August till now. Gold ended July, 2008 lower by $11 (1.1%).
Prior to that, the yellow metal ended second quarter with a marginal gain of 0.7%. It ended June, 2008 with a gain of 4.1%. In May, it ended with a gain of higher by $22.5 (2.5%). Before May, in April, prices closed lower by 6.3%. For first quarter prices gained 10.7%. In January, prices gained 11%, the highest monthly gain since April 2006. For February, it gained 6%. But in March, prices succumbed and fell by 5.5%.
On Tuesday, Comex silver futures for September delivery rose 0.5 cents (0.05%) to $13.22 an ounce. Earlier, it fell to $12.52/ounce. With today's rise silver has lost almost 11% in 2008 till date. Last week, it gave up 16.4%. It ended July 2008 with a gain of 3%. For the second quarter, it had gained a paltry 1.4%. Silver had gained 16% in Q1. The metal also had gained for seven straight years.
Gold and silver prices have dropped 22% and 38% from their all time highs that they reached earlier this year.
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. On the other hand, a lower dollar pushes up precious metal prices as their demand lessens as it becomes cheaper for traders holding other currencies. Gold has traditionally been used as a safe-haven asset against rising inflation. Investor sentiments are boosted by the fact that gold and silver are alternate sources of good investment in the face of declining dollar and rising energy prices and vice versa.
At the currency markets on Tuesday, the dollar index, which tracks the greenback against a trade-weighted basket of six major currencies, was at 76.74, down from 77.070. It climbed as high as 77.41 earlier. The dollar weakened in the face of weak economic data.
In economic news on Tuesday, the Labor Department reported that U.S. producer prices rose by a bigger-than-expected 1.2% in July. It was driven higher by prices for energy, food and other products. Market was looking for an increase of 0.3% in July. Excluding food and energy, producer prices rose 0.7% in the month, which was also higher than expected. In July, energy prices rose 3.1% and food prices climbed by 0.3%.
Also, the Commerce Department reported today that the number of new homes starting construction in July has sharply dropped. The number of new single-family permits dropped to the lowest level in 26 years. Builders are cutting back their production of new homes and trying to work off unsold inventory. Rising foreclosures on existing homes are complicating the builders' efforts to bring supply back down to meet sluggish demand. Housing starts fell 11% to a seasonally adjusted annual rate of 965,000 in July, 2008.It marked the lowest level for housing starts in 17 years. June's starts were revised higher to a 1.084 million annual pace. Housing starts are down 29.6% in the past year.
At the crude market on Tuesday, crude oil rose more than $1 a barrel as a weakening dollar prompted investors to purchase commodities as an inflation hedge. Crude oil for September delivery rose $1.66 (1.5%) to settle at $114.53 a barrel.
Earlier this year, the weakening dollar and higher global demand for raw materials had led to records this year for commodities including gold. Gold reached a record in March as a U.S. housing slump and credit crisis spurred the Federal Reserve to slash borrowing costs. The Federal Reserve halted cuts to its target bank lending rate in April, after slicing it in seven steps to 2% from 5.25% in September.
Gold had witnessed the greatest annual gain in twenty eight years by gaining $200/ounce (31%) in FY 2007 as lower interest rates had sent the dollar tumbling, and crude-oil prices rose to a record. Silver had climbed 16% in FY 2007. In 2006, silver had jumped 46% while gold gained 23%.
At the MCX, gold prices for October delivery closed higher by Rs 157 (1.4%) at Rs 11,663 per 10 grams. Prices rose to a high of Rs 11,744 per 10 grams and fell to a low of Rs 11,276 per 10 grams during the day's trading.
At the MCX, silver prices for September delivery closed Rs 240 (1.2%) higher at Rs 20,085/Kg. Prices opened at Rs 19,760/kg and rose to a high of Rs 20,339/Kg during the day's trading.
Gold and silver prices rose for second straight day on Tuesday, 19 August, 2008. prices rose after crude prices went up after a long time and the dollar weakened against its rivals. Traders were back in buying spree after prices fell to new lows last week. Barring these two days, and one day in between, gold and silver prices had registered losses in all the trading sessions in the current month of August, 2008. Silver prices also rose for the day.
Today, Comex Gold for December delivery rose $11.1 (1.4%) to close at $816.8 ounce on the New York Mercantile Exchange. It fell to an intra day low price of $792 earlier. Last week, the yellow metal gave up 8.4%. With today's gain, it has lost 11.3% in August, 2008 till date. On 17 March, 2008 prices had skyrocketed to a high of $1,034/ounce. But prices have dropped significantly (20.6%) since then.
This year, gold prices have lost 2.5% till date as the dollar rallied against the euro. It has lost almost $105 in August till now. Gold ended July, 2008 lower by $11 (1.1%).
Prior to that, the yellow metal ended second quarter with a marginal gain of 0.7%. It ended June, 2008 with a gain of 4.1%. In May, it ended with a gain of higher by $22.5 (2.5%). Before May, in April, prices closed lower by 6.3%. For first quarter prices gained 10.7%. In January, prices gained 11%, the highest monthly gain since April 2006. For February, it gained 6%. But in March, prices succumbed and fell by 5.5%.
On Tuesday, Comex silver futures for September delivery rose 0.5 cents (0.05%) to $13.22 an ounce. Earlier, it fell to $12.52/ounce. With today's rise silver has lost almost 11% in 2008 till date. Last week, it gave up 16.4%. It ended July 2008 with a gain of 3%. For the second quarter, it had gained a paltry 1.4%. Silver had gained 16% in Q1. The metal also had gained for seven straight years.
Gold and silver prices have dropped 22% and 38% from their all time highs that they reached earlier this year.
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. On the other hand, a lower dollar pushes up precious metal prices as their demand lessens as it becomes cheaper for traders holding other currencies. Gold has traditionally been used as a safe-haven asset against rising inflation. Investor sentiments are boosted by the fact that gold and silver are alternate sources of good investment in the face of declining dollar and rising energy prices and vice versa.
At the currency markets on Tuesday, the dollar index, which tracks the greenback against a trade-weighted basket of six major currencies, was at 76.74, down from 77.070. It climbed as high as 77.41 earlier. The dollar weakened in the face of weak economic data.
In economic news on Tuesday, the Labor Department reported that U.S. producer prices rose by a bigger-than-expected 1.2% in July. It was driven higher by prices for energy, food and other products. Market was looking for an increase of 0.3% in July. Excluding food and energy, producer prices rose 0.7% in the month, which was also higher than expected. In July, energy prices rose 3.1% and food prices climbed by 0.3%.
Also, the Commerce Department reported today that the number of new homes starting construction in July has sharply dropped. The number of new single-family permits dropped to the lowest level in 26 years. Builders are cutting back their production of new homes and trying to work off unsold inventory. Rising foreclosures on existing homes are complicating the builders' efforts to bring supply back down to meet sluggish demand. Housing starts fell 11% to a seasonally adjusted annual rate of 965,000 in July, 2008.It marked the lowest level for housing starts in 17 years. June's starts were revised higher to a 1.084 million annual pace. Housing starts are down 29.6% in the past year.
At the crude market on Tuesday, crude oil rose more than $1 a barrel as a weakening dollar prompted investors to purchase commodities as an inflation hedge. Crude oil for September delivery rose $1.66 (1.5%) to settle at $114.53 a barrel.
Earlier this year, the weakening dollar and higher global demand for raw materials had led to records this year for commodities including gold. Gold reached a record in March as a U.S. housing slump and credit crisis spurred the Federal Reserve to slash borrowing costs. The Federal Reserve halted cuts to its target bank lending rate in April, after slicing it in seven steps to 2% from 5.25% in September.
Gold had witnessed the greatest annual gain in twenty eight years by gaining $200/ounce (31%) in FY 2007 as lower interest rates had sent the dollar tumbling, and crude-oil prices rose to a record. Silver had climbed 16% in FY 2007. In 2006, silver had jumped 46% while gold gained 23%.
At the MCX, gold prices for October delivery closed higher by Rs 157 (1.4%) at Rs 11,663 per 10 grams. Prices rose to a high of Rs 11,744 per 10 grams and fell to a low of Rs 11,276 per 10 grams during the day's trading.
At the MCX, silver prices for September delivery closed Rs 240 (1.2%) higher at Rs 20,085/Kg. Prices opened at Rs 19,760/kg and rose to a high of Rs 20,339/Kg during the day's trading.
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