Yellow metal pares almost all its gains

Silver manages to end substantially higher

Bullion metal prices rose on Tuesday, 05 January 2010. However, gold actually pared most of its gains after dollar went up following mixed economic data.

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 Tuesday, gold for February delivery ended at $1,118.7 an ounce, higher by $0.40 (0.03%) an ounce on the New York Mercantile Exchange. During intra day trading, it rose to a high of $1,129.6.

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.

On Tuesday, March Comex silver futures ended higher by 33.7 cents (1.9%) at $17.8 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 Tuesday, the dollar index, which weighs the strength of dollar against the basket of six other currencies rose by almost 0.2% following disappointing home sales data.

The National Association of Realtors in US reported on Tuesday, 5 January 2009 that pending home sales plunged a seasonally adjusted 16% in November 2009 from October 2009. The pending sales index, which had risen nine months in a row before falling in November, was 15.5% higher than in November 2008. October's increase was revised higher to 3.9% from 3.7% previously reported.

Among other economic data expected for the day, the Commerce Department in US reported on Tuesday, 5 January 2009 that U.S. factory orders increased in November, 2009. Factory orders increased 1.1% in November, greater than the 0.8% expected by the market. This was the seventh increase in the past eight months.

At the MCX, gold prices for February delivery closed higher by Rs 3 (0.01%) at Rs 16,833 per ten grams. Prices rose to a high of Rs 16,939 per 10 grams and fell to a low of Rs 16,814 per 10 grams during the day's trading.

At the MCX, silver prices for March delivery closed Rs 393 (1.44%) higher at Rs 27,638/Kg. Prices opened at Rs 27,300/kg and rose to a high of Rs 27,688/Kg during the day's trading.