Bullion metals shine

Gold and silver rise for fourth straight day

Bullion metal prices shone on Wednesday, 06 January 2010. This was the fourth consecutive rise for precious metals. Chances of economic recovery depressed the dollar today.

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.

On Wednesday, gold for February delivery ended at $1,136.5 an ounce, higher by $17.8 (1.6%) an ounce on the New York Mercantile Exchange. During intra day trading, it rose to a high of $1,138.4.

Gold ended FY 2009 higher by 24%. In 2008, gold prices ended higher by 5.5%.

Last year, after hitting a low at $807.30 per ounce on 15 January 2009, gold futures rallied almost 51% to hit an all-time high at $1217.40 per ounce during early December of 2009 but fell from those levels at the end. Gold shed more than 7% in December.

On Wednesday, March Comex silver futures ended higher by 37.5 cents (2.4%) at $18.175 an ounce.

Silver futures had ended 2009 up 50%. Silver futures had hit a low at $10.42 on 15 January, 2009 and hit a high at $19.30 per ounce on 2 December, 2009. Like gold, silver also ended lower than its all time high level.

In the currency market on Wednesday, the dollar index, which weighs the strength of dollar against the basket of six other currencies fell by almost 0.2% following mixed economic data.

The Institute for Supply Management reported in US on Wednesday, 06 January 2010 that the service sectors of the U.S. economy rebounded in December 2009. The ISM non-manufacturing index rose to 50.1% from 48.7% in November. Market was expecting the ISM non-manufacturing index to rise to 51%.

Readings above 50% in the diffusion index indicate that activity at more firms is expanding rather than contracting. The report showed that seven industries reported growth, while nine reported contraction.

At the MCX, gold prices for February delivery closed higher by Rs 32 (0.2%) at Rs 16,865 per ten grams. Prices rose to a high of Rs 16,906 per 10 grams and fell to a low of Rs 16,755 per 10 grams during the day's trading.

At the MCX, silver prices for March delivery closed Rs 175 (0.63%) higher at Rs 27,813/Kg. Prices opened at Rs 27,678/kg and rose to a high of Rs 27,900/Kg during the day's trading.