Precious metals continue to shine

Prices rally despite upbeat US data

Bullion metal prices ended higher on Thursday, 19 September 2013 at Comex. December Comex gold futures prices closed sharply higher on Thursday and extended Wednesday afternoon's sharp gains that came after the U.S. Federal Reserve's Open Market Committee meeting. Gold prices continued to climb even after the latest U.S. economic data came in mostly upbeat.

Gold for December delivery ended higher by $61.7 (4.7%) at $1,369.3 an ounce on the Comex division of the New York Mercantile Exchange on Thursday.

December silver rose $1.73 or 8% to $23.29 an ounce on Comex on Thursday.

In the currency market, the dollar index, which weighs the strength of the dollar against a basket of six other currencies, rose by 0.2%.

The Federal Open Market Committee failed to announce plans to reduce the pace of its asset purchases, as many had expected. Although the Federal Reserve did not make a tapering announcement, the policy statement did contain updated economic projections. Notably, the forecast for 2013 and 2014 GDP was lowered with the Committee expecting this year's growth between 2.0% and 2.3% (2.3%-2.6% June forecast) and 2014 growth ranging between 2.9% and 3.1% (3.0%-3.5% June projection).

During his press conference, Mr. Bernanke said economic data received since June has not been strong enough to justify scaling back asset purchases just yet. The Fed Chairman also said that recent tightening of financial conditions, as well as the ongoing fiscal uncertainty, played a part in the decision to maintain asset purchases at a pace of $85 billion per month ($40 billion in mortgage-backed securities, $45 billion in Treasuries).

On the economic front at Wall Street today, weekly initial claims increased to 309,000 from an upwardly revised 294,000 (from 292,000). Computer glitches in California and Nevada prevented many claimants from filing for unemployment benefits. Those problems created a backlog of filings, which resulted in a temporarily lower initial claims level. The Department of Labor expects the backlog to be processed over the next week or two before the claims level returns to normal.

August existing home sales increased to 5.48 million from July's unrevised 5.39 million. The consensus expected sales to slip to 5.30 million. Sales in August were the strongest since February 2007 when 5.79 million existing home sales were sold.

The Philadelphia Fed's Business Outlook increased to 22.3 in September, its strongest level since March 2011, from 9.3 in August. The consensus expected the index to fall to 9.0. Separately, the current account deficit for the second quarter totaled $98.9 billion, which was narrower than the $100.0 billion deficit that had been broadly anticipated.

At the MCX, gold prices for October delivery closed higher by Rs 554 (1.84%) at Rs 30,554 per ten grams. Prices rose to a high of Rs 30,694 per 10 grams and fell to a low of Rs 30,105 per 10 grams during the day's trading.

At the MCX, silver prices for December delivery closed higher by Rs 176 (0.35%) at Rs 49,577/Kg. Prices opened at Rs 49,290/Kg and rose to a high of Rs 49,899/Kg during the day's trading.

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