Record run continues for bullions

Yellow metal strikes all time record high crossing the $1,800 mark during intraday trading

Precious metals scaled to record highs on Wednesday, 10 August 2011 at Comex. The investors tried to escape from equities and flock to bullions, which are seen as much safer and better bets in times of turbulence. Prices rose despite a strong dollar. News that Standard & Poor's downgraded US debt last weekend once again resumed heavy selling at Wall Street on Wednesday, 10 August 2011



Gold for December delivery rose $41.3 or 2.4%, to end at $1,784.3 an ounce on the Comex division of the New York Mercantile Exchange on Wednesday. During intra day trading, prices rose to a high of $1,801. It was all time record high price for the yellow metal. Last week, gold gained 1.3%. Gold has risen by 25.4% this year. This week, itself, it has gained almost 7.9%.

On Wednesday, silver prices for September delivery rose by $1.44 (3.8%) to end at $39.33. Last week, silver lost 1.4%.

The Fed announced last Tuesday, 09 August 2011 that it would keep interest rates, now near 0%, at ultralow levels at least through mid-2013, the first time it put a time frame on its low-rate stance. The monetary committee also lowered its outlook for the pace of recovery, and discussed a range of policy tools to stimulate growth.

The United States late Friday lost its triple-A debt rating from Standard & Poor's for the first time in history, with the credit-rating agency saying the political system of the world's top economy has become less stable and that budget cutting announced earlier this week didn't go far enough.

S&P lowered its rating on the U.S. by a notch to AA+ and, to compound the embarrassment, said the outlook is negative as well, as it threatened another reduction in two years. The rating agency said the deal reached by lawmakers to cut the federal deficit by an estimated $2.1 trillion over a decade didn't go far enough, and “America's governance and policymaking is becoming less stable, less effective, and less predictable than what was previously believed.

In the currency market on Wednesday, the dollar index, which measures the strength of the dollar against a basket of six other currencies, rose by almost 1%.

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.

At the MCX, gold prices for October delivery closed higher by Rs 473 (1.83%) at Rs 26,204 per ten grams. Prices rose to a high of Rs 26,457 per 10 grams and fell to a low of Rs 25,502 per 10 grams during the day's trading.

At the MCX, silver prices for September delivery closed higher by Rs 1,892 (3.3%) at Rs 59,303/Kg. Prices opened at Rs 57,694/kg and rose to a high of Rs 59,475/Kg during the day's trading.