Weak dollar helps prices register big gains
Bullion prices ended the U.S. day session sharply higher on Tuesday, 10 December 2013. Gold and silver were boosted by short covering and bargain hunting following recent downside pressure. After their recent successes, the gold and silver market bears now appear to be exhausted. The key outside markets were also in a bullish daily posture for the precious metals Tuesday, as the U.S. dollar index was lower and hit a five-week low, while crude oil prices were higher and hit a six-week high.
Gold for February delivery gained $26.90, or 2.2%, to settle at $1,261.10 an ounce on the Comex division of the New York Mercantile Exchange.
March silver futures climbed 61 cents, or 3.1%, to $20.32 an ounce.
Traders and investors are looking forward to next week's meeting (December 17-18) of the U.S. Federal Reserve's Open Market Committee (FOMC). Recent upbeat U.S. economic data, including a stronger-than-expected U.S. jobs report last Friday, suggest the Fed might move up its timeline for implementing a tapering of its monthly bond-buying program, also called quantitative easing.
In overnight news, European Central Bank president Mario Draghi said the EU is not headed for a deflationary debacle like that of Japaneven though EU inflation is very low and is expected to remain that way for quite some time. His comments suggest the ECB will keep its very easy money policies for a long time to come.
In today's economic data at Wall Street, wholesale inventories increased 1.4% in October after increasing an upwardly revised 0.5% (from 0.4%) in September. The consensus expected wholesale inventories to increase 0.3%. The increase in inventories followed a sizable gain in overall inventories in the third quarter. It was expected that inventory growth would slow considerably throughout the fourth quarter.
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Also, durable inventories increased 0.4% in October. Big gains in autos (2.7%) and furniture (1.3%) offset declines in computer (-5.7%) and professional (-1.4%) equipment. Meanwhile, nondurable inventories increased 3.0% in October, up from a 1.4% September gain. Almost two-thirds of the increase in nondurable goods inventories was the result of a 17.0% increase in farm product inventories.
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