Low dollar index and Larry Summers news take prices higher
Bullion metal prices ended moderately higher on Monday, 16 September 2013 at Comex. Many markets posted relief rallies Monday on the surprise weekend news that former U.S. Treasury secretary Larry Summers withdrew his name for consideration for Chairman of the U.S. Federal Reserve, due to the likely acrimony his nomination would have brought. A weaker U.S. dollar index was also a supportive outside market factor for gold and silver on Monday.
Gold for December delivery ended higher by $9.20 (0.7%) at $1,317.8 an ounce on the Comex division of the New York Mercantile Exchange on Monday.
December silver rose $0.29 or 1.3% to $22.01 an ounce on Comex on Monday.
In the currency market, the dollar index, which weighs the strength of the dollar against a basket of six other currencies, fell by 0.3%.
Gold and silver markets also popped up on the Summers news, but that rallies began to diminish as trading moved from Asia, to Europe and then to the U.S.
The other factor that put more risk appetite into the market place Monday is the weekend agreement by the U.S. and Russia on a plan for the international community to take over Syria's chemical weapons stockpiles. The risk of a U.S. military strike against Syria is presently very low, whereas two weeks ago it seemed imminent the U.S. would attack the Syrian regime.
Traders and investors are looking forward to this week's meeting of the U.S. Federal Reserve's Open Market Committee (FOMC). The meeting begins on Tuesday and ends at midday Wednesday. Fed Chairman Ben Bernanke will also hold a press conference Wednesday afternoon.
A majority of the market place believes the U.S. central bank at this week's meeting will announce it will begin to scale back, or taper its monthly bond-buying program. Some reckon the Fed will announce a $10 billion or $15 billion reduction in its $85 billion-a-month bond-buying program. The surprise to the markets could be if the Fed either does nothing at this meeting, or is more aggressive in its initial reduction in bond purchases. For the past several weeks the market place has been fixated on what the U.S. central bank will announce at the conclusion of this week's FOMC meeting.
On the economic front at Wall Street today, the Empire Manufacturing Survey for September registered a reading of 6.3, which was down from the prior month's reading of 8.2. Market had expected that the survey would improve to 9.0.
Separately, August industrial production increased 0.4% while the consensus expected an uptick of 0.5%. Capacity utilization hit 77.8%, which was in-line with the consensus.
At the MCX, gold prices for October delivery closed lower by Rs 341 (1.1%) at Rs 29,787 per ten grams. Prices rose to a high of Rs 30,051 per 10 grams and fell to a low of Rs 29,400 per 10 grams during the day's trading.
At the MCX, silver prices for December delivery closed lower by Rs 844 (1.7%) at Rs 49,832/Kg. Prices opened at Rs 49,752/Kg and fell to a low of Rs 48,866/Kg during the day's trading.
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