Bullion metals end their losing streak

Prices register modest gains as dollar weakens

Precious metals ended their four-day losing streak and ended higher on Monday, 10 January 2011 at Comex. Prices rose as the dollar fell and sovereign problems in Europe re-emerged.



On Monday, gold for February delivery rose by $5.2 (0.4%) ending at $1,374.1 an ounce on the New York Mercantile Exchange. Prices traded within a range of $1,376.4 and $1,365 for the entire day. Last week, gold ended lower by 3.7%. Last week, yellow metal ended lower in four out of five trading sessions.

For the month of December, gold ended higher by 2.5%. It ended the fourth quarter, higher by 8%, its ninth consecutive quarterly gain. Before this, it ended the third quarter higher by 5%. For the second quarter, gold ended up by 12%. For the first quarter of 2010, gold rose by 1.7%. For the year of 2010, gold ended higher by 30%, its tenth consecutive yearly gain.

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. But bullion metals have registered increase in prices despite strong dollar in recent times and vice versa.

Gold prices had been doing well since late August on expectations that Federal Reserve efforts at monetary stimulus will depress the dollar, making gold more valuable as an alternative store of wealth.

On Monday, December Comex silver futures ended higher by 19 cents (0.7%) at $28.86. Prices lost 7.3% last week.

Silver prices gained almost 55% in the fourth quarter of this year. For the third quarter, silver gained nearly 18%. For the second quarter, silver ended higher by 3.1%. For the first quarter of this year, silver rose by 3%. In FY 2010, silver ended higher by 83.7%.

In the currency market on Monday, the dollar index, which weighs the strength of the dollar against a basket of six other currencies fell by 0.2%. Reports that Portugal is preparing to take an European Union and International Monetary Fund bailout had earlier weakened the euro.

Bullion metal prices are expected to continue with their joyride in the coming months with gold expected to reach between $1,600 and $1,700 an ounce and silver likely to attempt to test highs in the $50 area.

At the MCX, gold prices for February delivery closed higher by Rs 41 (0.2%) at Rs 20,414 per ten grams. Prices rose to a high of Rs 20,462 per 10 grams and fell to a low of Rs 20,346 per 10 grams during the day's trading.

At the MCX, silver prices for March delivery closed Rs 151 (0.3%) higher at Rs 44,400/Kg. Prices opened at Rs 44,400/kg and rose to a high of Rs 44,600/Kg during the day's trading.