Bright day for bullions

Prices end at highest levels in a week

Bullion metals ended substantially higher on Thursday, 17 October, 2013 at Comex. Gold futures settled more than $40 an ounce higher on Thursday after U.S. lawmakers agreed a last-minute deal to increase the country's debt ceiling, averting a technical default, and put the government back to work after a 16-day shutdown. The sharply lower U.S. dollar index was also a bullish daily outside market force for the precious metals markets on Thursday.

Gold for December delivery jumped $40.70, or 3.2%, to settle at $1,323 an ounce on the Comex division of the New York Mercantile Exchange. Comex prices closed at their highest level in more than a week.

December silver rallied 58 cents, or 2.7%, to end at $21.95 an ounce, also its highest settlement in over a week.

The U.S. government was open for business on Thursday, after 16 days of partial closure. The U.S. Congress and President Obama came to a last-minute budget/debt ceiling deal on Wednesday and then passed and signed the legislation late Wednesday night. Thursday's U.S. and European stock market trepidation and the strength in gold was due in part to the fact the U.S. government debt ceiling and budget deal is only good for a few months, and this latest fiasco could be repeated early next year.

The U.S. dollar index was sharply lower on Thursday and hit a fresh 8.5-month low, as currency traders realized the budget/debt deal reached Wednesday is just a band-aide placed on a gaping wound, and that the Federal Reserve won't be tapering its monthly bond purchases any time soon. There were reports overnight that a China-based credit rating agency downgraded the U.S. government's credit rating.

On the economic front, computer problems in California kept the initial claims level elevated for a second week in a row. The weekly initial claims level fell to 358,000 from a slightly downwardly revised 373,000 (from 374,000) for the week ending October 5. The consensus expected the initial claims level to fall to 330,000.

Separately, the manufacturing sector in the Philadelphia region remained strong in October. The Philadelphia Fed's Business Outlook Survey fell to 19.8 from 22.3 in September. The consensus expected the index to fall to 7.0. Unlike what happened in the New York Fed's Empire Manufacturing Sector, the manufacturing outlook in the Philly region was not affected by the government shutdown.

There is no economic data scheduled to be reported tomorrow.

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