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Monday, June 01, 2009

Bright month for precious metals

Silver witnesses largest monthly gain in more than two decades

Precious metals ended higher on Friday, 29 May, 2009 at Comex. With the day's gains, bullion metals also ended the month of May substantially higher. Prices ended higher as encouraging economic report increased inflation concerns thereby increasing the appeal of precious metals. The sharp drop in the dollar index also led to shining precious metals.

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 Friday, Comex Gold for June delivery rose $17.3 (1.8%) to close at $978.8 an ounce on the New York Mercantile Exchange. For the week, gold ended higher by 2%. Year to date, gold prices are higher by 12.4%.

With Friday's gain, gold ended the month of May higher by 9.8%. It was the highest monthly gain registered by gold in six months. Before this, gold had suffered losses in prior two months. For the month of April and March, 2009, gold had lost 3.7% and 2.1% respectively. But the metal gained 4.3% in the first quarter of this year.

On 17 March, 2008 prices had skyrocketed to a high of $1,034/ounce. But prices have dropped somewhat (5.4%) since then.

On Friday, Comex silver futures for July delivery rose 45 cents (2.9%) at $15.61 an ounce. For the week, silver ended higher by 6.2%. For the month of May, silver gained 26.6%. It was the biggest monthly gain for silver in more than two decades. Year to date, silver has climbed 37% this year. For 2008, silver had lost 24%.

The Commerce Department reported on Friday, 29 May, 2009 that the U.S. economy contracted at a revised 5.7% annual rate in the first quarter, a decline that's smaller than the 6.3% drop in the fourth quarter.

In the currency market on Friday, the U.S. Dollar Index, a gauge of the greenback against six major currencies, slid as much as 1.6%, heading for a 6.1% drop in May. The index lost 1% last month and 2.9% in March.

In 2008, gold prices ended higher by 5.5%. The dollar index had gained 12% that year.

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