Precious metals manage to eke out gains

Prices fluctuate between red and green for entire day

Precious metal prices rose for fifth straight day on Tuesday, 22 March 2011 at Comex. Prices kept oscillating between red and green for entire day. Prices went up as tensions in Middle East, especially in Libya continued luring investors towards precious metals as an alternate safe mode of investment. Prices also rose due to weak economic data and as the dollar stayed weak before recovering partly later in the day.

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 for April delivery rose $1.2, or 0.1%, to end at $1,427.6 an ounce on the Comex division of the New York Mercantile Exchange. It rose to a high of $1,432.3 and fel to a low of $1,419.5 during intra day trading. Last week, gold lost 0.4%.

Gold ended the month of February higher by 5.6% following a 6.1% drop in January 2011. For the year of 2010, gold ended higher by 30%, its tenth consecutive yearly gain.

Silver prices for May delivery rose $0.27 (0.8%) to end at $3.27. Last week, silver lost 2.5%. Prices gained more than 20% in February 2011 after shedding 9% this year in January. In FY 2010, silver ended higher by 83.7%.

In the currency market on Tuesday, the dollar index, which measures the strength of the dollar against a basket of six other currencies, weakened. The dollar index slipped by 0.2%. The U.S. dollar turned up against the euro Tuesday following speculation that Ireland was having trouble paying off its debt, bringing the sovereign-debt worries in the region back to the forefront.

The conflict in Libya continued to dominate the headlines, with unrest in Yemen and Syria also vying for investors' attention and adding to concerns that more strife could hit the Middle East and North Africa region, home to key oil exporters.

In economic news, the Federal Housing Finance Agency reported that U.S. housing prices fell a seasonally adjusted 0.3% in January. Data for December were also revised down to a 1.0% drop from an originally reported decline of 0.3%.

At the MCX, gold prices for April delivery closed lower by Rs 45 (0.2%) at Rs 20,908 per ten grams. Prices rose to a high of Rs 20,990 per 10 grams and fell to a low of Rs 20,835 per 10 grams during the day's trading.

At the MCX, silver prices for May delivery closed Rs 234 (0.4%) higher at Rs 54,296/Kg. Prices opened at Rs 54,199/kg and rose to a high of Rs 54,500/Kg during the day's trading.