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Tuesday, February 09, 2010

Precious metals climb back

Prices gain ground as dollar's rally comes to halt

Precious metal prices kicked off the new week with a rise on Monday, 08 February 2010. Prices rose as the dollar's rally came to a halt.

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 April delivery ended at $1,066.2 an ounce, higher by $13.4 (1.3%) an ounce on the New York Mercantile Exchange. Earlier during intra day trading, it rose to a high of $1,074.3. Gold had shed almost 6% in the past three sessions. Today's gain was the largest gain for yellow metal in February till date. Last week, gold lost 2.9%. For January 2010, gold lost 1.2%. Year to date, gold has shed 2.6%.

On Monday, March Comex silver futures ended higher by 25.5 cents (1.7%) at $15.085 an ounce. Last week, silver ended lower by 7.8%. In January 2010, silver shed 3.9%.Year to date in FY 2010, silver has dropped by almost 10%.

In the currency market on Monday, the dollar index, which weighs the strength of dollar against the basket of six other currencies fell by almost 0.4%. The dollar had risen to seven month high against its counterparts last week.

Precious metal prices started slipping since past couple of weeks due to impending worries from China front where tightening monetary policies are bothering investors due to shaky demand of metals in coming months.

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 April delivery closed lower by Rs 10 (0.06%) at Rs 16,276 per ten grams. Prices rose to a high of Rs 16,349 per 10 grams and fell to a low of Rs 16,221 per 10 grams during the day's trading.

At the MCX, silver prices for March delivery closed Rs 93 (0.38%) lower at Rs 24,231/Kg. Prices opened at Rs 24,325/kg and fell to a low of Rs 24,010/Kg during the day's trading.

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