Bullions end mixed

Gold settles lower while silver shines ahead of FOMC meet

Precious metals ended mixed on Wednesday, 21 September 2011 at Comex. Gold ended marginally lower after spending the entire day in the red. Silver prices ended higher. Bullions ended mixed as most metals traders awaited the outcome of the Federal Open Market Committee meeting. The dollar index slipped marginally today.

Gold for December delivery fell $1 or 0.1%, to end at $1,808.1 an ounce on the Comex division of the New York Mercantile Exchange on Wednesday. Last week, gold lost 2.4%. It rose by $201 or 12% during the month of August.



On Wednesday, silver prices for December delivery rose $0.33 (0.8%) to end at $40.47. Last week, silver lost 1.9%. For the month of August, silver gained 4.1%.

The FOMC announced this afternoon that in order to support a stronger economic recovery it intends to purchase $400 billion of Treasuries with maturities of six years to 30 years, while selling an equal amount of Treasuries with remaining maturities of three years or less, by the end of June 2012. Many market pundits had anticipated such a plan, and had already designated it "Operation Twist" to reflect the Fed's focus on selling shorter term Treasuries and buying longer-term issues. To little surprise, the FOMC also reiterated that it expects economic conditions to warrant exceptionally low levels of the federal funds rate at least through mid-2013.

US stocks ended strictly lower following Fed's comments and also in response to news that Bank of America, Wells Fargo and Citigroup all had their debt ratings downgraded by analysts at Moody's. The decision comes after Moody's had put the firms under review a few months ago.

In the currency market on Wednesday, the dollar index, which measures the strength of the dollar against a basket of six other currencies, ended lower by 0.16%.

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 102 (0.4%) at Rs 28,141 per ten grams. Prices rose to a high of Rs 28,225 per 10 grams and fell to a low of Rs 27,931 per 10 grams during the day's trading.

At the MCX, silver prices for December delivery closed higher by Rs 918 (1.4%) at Rs 65,294/Kg. Prices opened at Rs 64,510/kg and rose to a high of Rs 65,540/Kg during the day's trading.