Precious metals continue to rise

Political tensions and inflation worries take prices higher

Gold prices struck new all time high on Wednesday, 02 March 2011 at Comex. Geo-political tensions, higher inflation worries, and comments by the Fed Chairman took prices higher to fresh highs. Silver continued to sport three-decade high figures.



On Wednesday, gold for April delivery ended higher by $6.5 (0.5%) at $1,437.7 mark on the New York Mercantile Exchange. During intra day trading, prices rose to a high of $1,441. Last week, gold ended higher by 1.5%. For the year, gold has risen by 1.2% till date.

Gold ended the month of February higher by 5.6% following a 6.1% drop in January 2011. For the year of 2010, gold ended higher by 30%, its tenth consecutive yearly gain.

On Wednesday, March Comex silver futures ended higher by $0.41 (1.2%) at $34.84. That was a fresh thirty-two year high for silver. Prices gained 1.9% last week. Prices gained more than 20% in February 2011 after shedding 9% this year in January. For the year till date, silver is higher by 13.5%. In FY 2010, silver ended higher by 83.7%.

Traders kept a close eye on the clashes in the Mid East region. The revolt in Libya is the latest in a spate of political uprisings across the Mideast and North Africa in recent weeks.

Participants got their hands on a strong ADP Employment Change this morning. According to the report, private payrolls increased by 217,000 in February. That is much greater than what had been widely expected.

Despite the encouraging report, Fed Chairman Bernanke reminded the House of Representatives unemployment remains stubbornly high during his semi-annual monetary policy testimony. He also noted, though, that the overall economy has strengthened.

In the latest Beige Book, The Fed stated that overall activity improved across the various districts. Additionally, the Beige Book stated that input costs have increased, but wage pressures remain steady. It also notes that several districts showed improvements in commercial and real estate leasing, even though overall loan demand remains mixed and lending standards remain tight.

At the MCX, gold prices for April delivery closed higher by Rs 88 (0.4%) at Rs 21,152 per ten grams. Prices rose to a high of Rs 21,189 per 10 grams and fell to a low of Rs 20,090 per 10 grams during the day's trading.

At the MCX, silver prices for May delivery closed Rs 491 (0.95%) higher at Rs 52,082/Kg. Prices opened at Rs 51,700/kg and rose to a high of Rs 52,250/Kg during the day's trading.