Precious metals rise for second straight day

Prices register modest gains as dollar stays steady

Precious metals ended higher for second straight day on Tuesday, 11, January 2011 at Comex. Prices rose as the dollar stayed steady and sovereign problems in Europe re-emerged. Bullion metals had ended their four-day losing streak and ended higher on Monday.



On Tuesday, gold for February delivery rose by $10.2 (0.7%) ending at $1,384.3 an ounce on the New York Mercantile Exchange. Prices rose to a high of $1,386.8 during intra day trading. Last week, gold ended lower by 3.7%.

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 Tuesday, March Comex silver futures ended higher by 64 cents (2.2%) at $29.5. 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 Tuesday, the dollar index, which weighs the strength of the dollar against a basket of six other currencies stayed steady. Portugal faces a key test on Wednesday when it will hold a government bond auction.

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 15 (0.07%) at Rs 20,429 per ten grams. Prices rose to a high of Rs 20,474 per 10 grams and fell to a low of Rs 20,343 per 10 grams during the day's trading.

At the MCX, silver prices for March delivery closed Rs 451 (1%) higher at Rs 44,850/Kg. Prices opened at Rs 44,480/kg and rose to a high of Rs 45,040/Kg during the day's trading.