Precious metals shine

Prices register modest weekly gains

Precious metals soared to their best levels in almost a month's time on Tuesday, 15 February 2011 at Comex. Prices rose as some Middle East conflict spurred up mainly in Yemen and Bahrain. Prices also went up after dollar managed a flat finish against its counterparts.



On Tuesday, gold for April delivery ended higher by $9 (0.7%) at $1,374.1 mark on the New York Mercantile Exchange. It was highest close for gold in five weeks. Last week, gold ended higher by 0.8%. For the year, gold has dropped by 3.3% till date.

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.

On Tuesday, March Comex silver futures ended higher by $0.16 (0.5%) at $30.7. Prices gained 4.4% last week. Prices have shed 9% this year in January. For the year till date, silver is unchanged%.

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, finished flat.

Lending further support for gold, euro-zone finance ministers late Monday agreed to increase the size of the permanent euro bailout fund to up to $500 billion, with the possibility of additional money from the International Monetary Fund.

The New York Federal Reserve Bank reported on Tuesday that conditions for manufacturing in the New York region improved in February from the prior month. The bank's Empire State Manufacturing index rose to 15.4 in February from a revised 11.9 in January. This is the highest level since last June and above expectations. Market had forecast the index would rise to 14.3.

The Commerce Department in US reported on Tuesday, 15 February 2011 that sales at U.S. retail stores rose 0.3% in January to mark the seventh straight monthly gain. But the increase was the lowest since last summer. Sales excluding the volatile auto segment were also up 0.3%. Market had forecast sales to rise by 0.6% overall, and by 0.6% excluding autos.

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 April delivery closed higher by Rs 130 (0.63%) at Rs 20,500 per ten grams. Prices rose to a high of Rs 20,545 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 235 (0.5%) higher at Rs 46,390/Kg. Prices opened at Rs 46,200/kg and rose to a high of Rs 46,683/Kg during the day's trading.