Mixed end for precious metals

Gold shines but silver sheds glaze

Precious metal prices dillydallied for the entire day in search of direction on Tuesday, 06 April 2010. Ultimately, gold prices ended higher despite the dollar index surging significantly higher. The yellow metal price rose on anticipation of higher demand in coming months, which arose following bullish economic data since past couple of sessions. However, silver prices slipped.

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 Tuesday, gold for June delivery ended at $1,136 an ounce, higher by $2.2 (0.2%) an ounce on the New York Mercantile Exchange. Last week, gold ended higher by 1.8%. In FY 2010, gold touched a high of $1,154 in January. For the month of March, gold slid 0.4%. For the first quarter of this year, gold rose by 1.7%, its sixth quarterly rise. On a year to date basis, gold is higher by 3.6%.

On Tuesday, May Comex silver futures ended lower by 18.7 cents (1%) at $17.931 an ounce. For the month of March, silver ended higher by 5%. For the first quarter of this year, silver rose by 3%. On a year to date basis, silver is higher by 5.4%.

In the currency market on Tuesday, the dollar index, which measures the strength of the dollar against basket of six other currencies rose by almost 0.6%. The dollar index gained about 0.7% in March and rallied 4% during the first quarter. The dollar index has gained 4.7% this year till date.

Among economic reports scheduled on Tuesday, minutes from the most recent FOMC meeting were announced. According to those minutes, the Fed's extended period language does not limit ability to tighten policy promptly, but the "extended period" could last longer if economy worsens or inflation declines. To the latter point, the FOMC members stated that consumer spending in the first quarter still seemed constrained and that inflation data has shown a greater-than-expected decline.

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 June delivery closed higher by Rs 54 (0.32%) at Rs 16,556 per ten grams. Prices rose to a high of Rs 16,595 per 10 grams and fell to a low of Rs 16,425 per 10 grams during the day's trading.

At the MCX, silver prices for May delivery closed Rs 139 (0.5%) lower at Rs 27,278/Kg. Prices opened at Rs 27,380/kg and fell to a low of Rs 27,230/Kg during the day's trading.