Precious metals witness strong weekly and monthly gains

Silver registers third consecutive healthy monthly gains

Precious metal prices registered strong gains for the month of October 2010. Prices ended with modest gains on the last trading day of October, Friday, 29 October 2010 at Comex. Anticipation among traders regarding Fed's moves on quantitative easing next week took precious metals higher. The dollar also softened on Friday.



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 Friday, gold for December delivery ended at $1,357.6 an ounce, higher by $15.1 (1.1%) on the New York Mercantile Exchange. For the week, gold ended higher by 2.5%.

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 23.5%.

The metal hit its recent string of record highs in October amid quantitative-easing expectations and related inflation fears, as well as on the back of the dollar's trend of weakness. Gold's recent lower prices have been lending some support for sales of physical gold, offering a floor to prices.

On Friday, December Comex silver futures ended higher by 69 cents (2.9%) at $24.56. For the week, silver ended higher by 6.2%. 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 44.1%.

In the currency market on Friday, the dollar index, which weighs the strength of the dollar against a basket of six other currencies fell by 0.1%. Speculation that any future measures of quantitative easing might be applied gradually or be smaller in scope have kept the dollar volatile in recent times.

The Commerce Department in US reported on Friday, 29 October 2010 that the U.S. economy grew at a slightly slower pace than expected. The report said gross domestic product rose at a 2% annual rate in the third quarter while market had expected a 2.1% growth rate.

Another report showed that the Reuters/University of Michigan consumer-sentiment index fell to 67.7 in October from 68.2 the previous month.

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.