Good gains for precious metals

Prices rise despite strong dollar

Precious metals bounced back and ended considerably higher on Monday, 24 May 2010 at Comex. Prices rose despite a strong dollar. Prices rose today as traders thought that last week's selling of commodities leading to lower prices was overdone.

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 $1,194 an ounce, higher by $17.9 (1.5%) an ounce on the New York Mercantile Exchange. Gold for June delivery had 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 lower by 4.2%. 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 8.8%.

On Monday, July Comex silver futures ended higher by 35 cents (2%) at $18 an ounce. Last week, silver ended lower by 8.1%. 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 4.5%.

In the currency market on Monday, the dollar index, which measures the strength of the dollar against a basket of six other currencies rose by 0.9%.

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 163 (0.9%) at Rs 18,165 per ten grams. Prices rose to a high of Rs 18,185 per 10 grams and fell to a low of Rs 17,968 per 10 grams during the day's trading.

At the MCX, silver prices for July delivery closed Rs 287 (1%) higher at Rs 28,719/Kg. Prices opened at Rs 28,540/kg and rose to a high of Rs 28,765/Kg during the day's trading.