Gold ends at highest levels in five months

Greece's bailout package fails to erase all concerns

Precious metals remained higher at Comex on Monday, 03 May 2010 after Greece's aid package failed to erase all of euro zone's worries and dollar once again climbed up against the euro. Prices also rose riding on the back of strong economic data.

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 $1,183.3 an ounce, higher by $2.6 (0.2%) an ounce on the New York Mercantile Exchange. This was highest level for gold in five months. Gold for June delivery settled above $1,200 in early December, only to pull back to $1,172 area and dip as much as the $1,050 vicinity in early February. Last week, gold ended higher by 2.3%. For the month of April, gold ended higher by 6%. 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 7.9%.

On Monday, May Comex silver futures ended higher by 20 cents (1%) at $18.84 an ounce. Last week, silver ended higher by 2.4%. For the month of April, silver ended higher by 4.1%. For the first quarter of this year, silver rose by 3%. On a year to date basis, silver is higher by 8.1%.

A bailout package worth some $146 billion for Greece was announced over the weekend, but it was not enough to restore investors' confidence about the euro-zone countries and the euro and investors again sought gold as a hedge against currency fears.

In the currency market on Monday, the dollar index, which measures the strength of the dollar against basket of six other currencies rose by 0.5%. The dollar is up some 5.5% for the year.

The Commerce Department in US reported on Monday, 03 May 2010 that boosted by spending on autos, real U.S. consumer spending increased 0.5% to a record high in March, the highest in five months time. After-tax, inflation-adjusted incomes increased 0.2% in the month, with transfer payments such as unemployment benefits accounting for the gain. With spending growing much faster than incomes in March, the personal savings rate fell to 2.7%, the lowest since September 2008. The savings rate had peaked at 6.4% last May.

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 61 (0.35%) at Rs 17,186 per ten grams. Prices rose to a high of Rs 17,255 per 10 grams and fell to a low of Rs 17,133 per 10 grams during the day's trading.

At the MCX, silver prices for July delivery closed Rs 239 (0.84%) higher at Rs 28,536/Kg. Prices opened at Rs 28,220/kg and rose to a high of Rs 28,560/Kg during the day's trading.