Precious metals add more glaze

Precious metals continue to stay bright on the second day of second quarter

Precious metal prices ended higher on Monday, 05 April 2010. Prices rose as the dollar weakened. Prices also rose along with crude prices on anticipation of higher demand in coming months, which arose following better than expected economic reports.

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 June delivery ended at $1,133.8 an ounce, higher by $7.7 (0.7%) 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 3.4%.

On Monday, May Comex silver futures ended higher by 23 cents (1.3%) at $18.11 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 6.4%.

In the currency market on Monday, the dollar index, which measures the strength of the dollar against basket of six other currencies slipped by 0.2%. The dollar index gained about 0.7% in March and rallied 4% during the first quarter.

Among economic reports scheduled on Monday, The National Association of Realtors in US reported on Monday, 05 April 2010 that there was a seasonally adjusted 8.2% increase in its pending home sales index in February. The NAR's index tracks sales contracts on existing homes, and is seen to be a good indicator of actual sales, which are recorded a month or two later at closing.

Among other economic data, The Institute for Supply Management in US reported on Monday, 05 April 2010 that the ISM non-manufacturing index rose to 55.4% from 53.0% in February. The gain was stronger than expected. Market was expecting the index to rise to 54%. The report indicated that activity in the service sector of the U.S. economy improved markedly in March, indicating that the recovery is broadening out.

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 lower by Rs 57 (0.34%) at Rs 16,502 per ten grams. Prices rose to a high of Rs 16,572 per 10 grams and fell to a low of Rs 16,437 per 10 grams during the day's trading.

At the MCX, silver prices for May delivery closed Rs 4 (0.01%) lower at Rs 27,417/Kg. Prices opened at Rs 27,450/kg and fell to a low of Rs 27,216/Kg during the day's trading.