Bullion metals edge up

Prices rise as dollar drops against competitors

Precious metal prices rose for third straight session on Monday, 11 January 2010. Prices rose as dollar slipped following reports in the market about Federal Reserve insisting to keep interest rates low currently in the US market. The same enhanced the appeal of precious metal as an alternate investment. Strong trade data from China also boosted prices.

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 $1,151.4 an ounce, higher by $12.5 (1.1%) an ounce on the New York Mercantile Exchange. Last week, it had ended higher 3.9%. Year to date in FY 2010, gold has risen by almost 5%.

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.

On Monday, March Comex silver futures ended higher by 23 cents (1.2%) at $18.7 an ounce. Last week, silver ended higher by 9.6%. Year to date in FY 2010, silver has risen by almost 10.8%.

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.

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 0.8%. It fell to a three-week low against the euro today.

Yesterday, Chinese government report showed that exports climbed for the first time in 14 months and imports reached record highs. China's imports surged 55.9% in December, while exports rose 17.7% from the same period a year ago. In addition, China's Finance Minister pledged to spend the full amount of planned stimulus in 2010, despite improvements in its economy and efforts to control bank lending.

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.

At the MCX, gold prices for February delivery closed higher by Rs 131 (0.55%) at Rs 17,031 per ten grams. Prices rose to a high of Rs 17,104 per 10 grams and fell to a low of Rs 16,911 per 10 grams during the day's trading.

At the MCX, silver prices for March delivery closed Rs 196 (0.69%) higher at Rs 28,434/Kg. Prices opened at Rs 28,280/kg and rose to a high of Rs 28,590/Kg during the day's trading.