Bright day for bullion metals

Prices rise considerably higher due to a rally in gold priced in Euros

Bullion metal prices shot up on Monday, 07 June 2010 at Comex. A rally in gold priced in Euros, supported by a flight to safety, helped push precious metals futures higher today. Concerns regarding global economic health also pushed prices higher.

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. Recently, the embattled euro has played stronger role in moving prices rather than dollar fluctuation. Bullion metals have registered increase in prices despite strong dollar in recent times.



On Monday, gold for August delivery ended at $1,240.8 an ounce, higher by $23.1 (1.9%) an ounce on the New York Mercantile Exchange. Last week, gold ended higher by 0.3%. Prices had touched an all time high of $1,249.7 on 14 May 2010. Today, it fell a little short of the same.

Gold for June delivery had settled above $1,200 in early December 2009, only to pull back to $1,172 area and dip as much as the $1,050 vicinity in early February 2010. Gold ended May higher by 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 12.8%.

On Monday, July Comex silver futures ended higher by 86 cents (5%) at $18.16 an ounce. Last week, silver ended lower by 6%. For May, silver shed 1.1%. 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 4.8%.

In the currency market on Monday, the dollar stayed strong for almost the entire day and the dollar index ended the day with a 0.3% gain.

Among economic reports for the day, it was shown that consumer credit increased by $1 billion in April. That made for a sharp upturn from the downwardly revised $5.4 billion decline in consumer credit for the prior month.

Market participants continued to sell stocks even today after officials from Hungary last week stated that economic conditions in their country are grave and that the country might be the next one in defaulting on its debt. In addition, the country does not plan to put austerity measures in place, leading many wonder whether the European Union will have to provide a bailout.

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 August delivery closed higher by Rs 167 (0.9%) at Rs 18,961 per ten grams. Prices rose to a high of Rs 18,990 per 10 grams and fell to a low of Rs 18,610 per 10 grams during the day's trading.

At the MCX, silver prices for July delivery closed Rs 726 (2.55%) higher at Rs 29,167/Kg. Prices opened at Rs 28,494/kg and rose to a high of Rs 29,220/Kg during the day's trading.