Precious metals kick off New Year with brightness

Prices end higher as dollar slips sharply

Bullion metal prices rose on the first day of trading of FY 2010 on Monday, 04 January 2010. Prices rose as the dollar fell sharply. Upbeat economic reports also helped precious metals shine.

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 $1,118.3 an ounce, higher by $22.1 (2%) an ounce on the New York Mercantile Exchange. During intra day trading, it rose to a high of $1,124.6.

Gold ended FY 2009 higher by 24%. In 2008, gold prices ended higher by 5.5%.

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 61.8 cents (3.7%) at $17.463 an ounce.

Silver futures ended 2009 up 50%. 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 against almost all the counterparts. The dollar index settled for a loss of 0.5%.

Among economic data expected for the day, The Institute for Supply Management in US reported on Monday, 04 January, 2010 that manufacturing sector in US expanded in December for the fifth straight month. The ISM manufacturing index rose to 55.9% from 53.6% in November. It was the highest since April 2006. Market was expecting a modest gain to 54.2%. Readings over 50% indicate that more manufacturing firms said business was improving than said it was worsening.

At the MCX, gold prices for February delivery closed higher by Rs 97 (0.57%) at Rs 16,830 per ten grams. Prices rose to a high of Rs 16,894 per 10 grams and fell to a low of Rs 16,656 per 10 grams during the day's trading.

At the MCX, silver prices for March delivery closed Rs 410 (1.5%) higher at Rs 27,245/Kg. Prices opened at Rs 26,821/kg and rose to a high of Rs 27,341/Kg during the day's trading.