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Tuesday, May 25, 2010

Good gains for precious metals


Prices rise despite strong dollar

Precious metals bounced back and ended considerably higher on Monday, 24 May 2010 at Comex. Prices rose despite a strong dollar. Prices rose today as traders thought that last week's selling of commodities leading to lower prices was overdone.

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 Monday, gold for June delivery ended at $1,194 an ounce, higher by $17.9 (1.5%) an ounce on the New York Mercantile Exchange. Gold for June delivery had settled above $1,200 in early December, only to pull back to $1,172 area and dip as much as the $1,050 vicinity in early February.

Last week, gold ended lower by 4.2%. For the month of April, gold ended higher by 6%. For the first quarter of this year, gold rose by 1.7%, its sixth quarterly rise. On a year to date basis, gold is higher by 8.8%.

On Monday, July Comex silver futures ended higher by 35 cents (2%) at $18 an ounce. Last week, silver ended lower by 8.1%. For the month of April, silver ended higher by 4.1%. For the first quarter of this year, silver rose by 3%. On a year to date basis, silver is higher by 4.5%.

In the currency market on Monday, the dollar index, which measures the strength of the dollar against a basket of six other currencies rose by 0.9%.

Gold had ended FY 2009 higher by 24%. Silver futures had ended 2009 up 50%. The dollar index had lost 4.2% against its counterparts last year.

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. 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.

At the MCX, gold prices for June delivery closed higher by Rs 163 (0.9%) at Rs 18,165 per ten grams. Prices rose to a high of Rs 18,185 per 10 grams and fell to a low of Rs 17,968 per 10 grams during the day's trading.

At the MCX, silver prices for July delivery closed Rs 287 (1%) higher at Rs 28,719/Kg. Prices opened at Rs 28,540/kg and rose to a high of Rs 28,765/Kg during the day's trading.