Precious metals rise sharply in April

Prices get boost from uncertainty surrounding Greece and its rescue package

A sharp increase in volatility and widespread weakness among stocks sent many market participants into gold at Comex on Friday, 30 April 2010. Silver was also up, but not quite as strong. Precious metals got a boost from fears and uncertainty still surrounding Greece and its rescue package. The weak dollar also aided in rise in prices further.

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 Friday, gold for June delivery ended at $1,180.7 an ounce, higher by $11.9 (1%) an ounce on the New York Mercantile Exchange. 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. For the 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 7.7%.

On Friday, May Comex silver futures ended higher by 32 cents (0.6%) at $18.63 an ounce. For the 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 7.1%.

In the currency market on Friday, the dollar index, which measures the strength of the dollar against basket of six other currencies initially fell by 0.3%. The dollar still finished the week with a 0.6% gain, which puts it up 0.5% for the month and up some 5% for the year.

Stiff selling at Wall Street on Friday resulted in the stock market's worst weekly loss since January and marked a weak finish to April. Still, the stock market was able to book its third straight monthly gain. The early tone of trade was tepid as market participants made little response to news that the first quarter GDP hit an annualized rate of 3.2%. The headline number was essentially on par with the 3.3% increase that had been widely expected.

Separately, the Reuters/University of Michigan consumer sentiment index showed that U.S. consumer sentiment improved marginally in late April after sinking earlier in the month. The index rose to 72.2 from 69.5 in mid-April. Market had expected an increase to about 71. March's final reading was 73.6. The index has been largely unchanged since November, remaining at depressed levels.

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.