Precious metals add some more shine

Prices rise as dollar continues to slip

Bullion metal prices went up on Monday, 28 December 2009. Prices rose as the dollar fell and due to rising geo political tensions in the Middle East.

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 February delivery ended at $1,107.9 an ounce, higher by $3.1 (0.3%) an ounce on the New York Mercantile Exchange. Earlier during the day, gold was trading lower. Last week, it had dropped below the $1,100 level for first time in more than one and half months. Last week, gold shed 0.6%. The metal fell for four straight weeks.

Gold ended November 2009 higher by 13%. Before that, for the third quarter it ended higher by 8.7%. For the second quarter, gold ended higher by 0.5%. The metal had gained 4.3% in the first quarter of this year. On a year to date basis, gold price is higher by 26.4%.

Gold has come under pressure since early December, with the dollar having risen steadily on expectations that the Federal Reserve will next year pull back on measures to support the economy.

On Monday, December Comex silver futures ended higher by 12 cents (0.7%) at $17.56 an ounce. Last week, silver registered 0.7% gain. The metal has gained 54.3% this year until date.

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%.

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