Precious metals continue to eke out new highs

Weak dollar, European debt problem, and Mid East crisis pull up prices

Precious metal prices once again witnessed new record highs on Wednesday, 06 April 2011 at Comex. Prices glittered following the continuing mid east crises, and Europe's sovereign debt problems. Investors continued to return to bullions as a safe haven for investment amid a weak dollar. Higher oil prices additionally in recent times helped gold not only by heightening fears of inflation but also by pushing pan-commodities indexes 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. But bullion metals have registered increase in prices despite strong dollar in recent times and vice versa.

Gold for June delivery rose $6, or 0.4%, to end at $1,458.5 an ounce on the Comex division of the New York Mercantile Exchange. This was a record close for gold. During intra day trading, gold rose to a high of $1,463.7. Last week, gold gained 0.2%.

For the year till date, gold is up by 2.6%. Gold ended the month of March higher by 2.1%. For the first quarter of FY 2011, gold ended higher by 1.3%. For the year of 2010, gold ended higher by 30%, its tenth consecutive yearly gain.

On Tuesday, silver prices for May delivery rose 20 cents (0.5%) to end at $39.39. Last week, silver gained 1.8%. Prices have gained 27.5% till date this year. Prices gained 12% in March 2011. Silver eked out a gain of 22% for the first quarter of this year. In FY 2010, silver ended higher by 83.7%.

In addition to ongoing fighting in Libya, where rebel forces and government forces continue to vie for the upper hand in a NATO-led military intervention, Europe's debt crisis came back to the fore this week as Portugal appeared to get closer to asking for a bailout.

At the MCX, gold prices for June delivery closed higher by Rs 4 (0.01%) at Rs 21,166 per ten grams. Prices rose to a high of Rs 21,234 per 10 grams and fell to a low of Rs 21,123 per 10 grams during the day's trading.

At the MCX, silver prices for May delivery closed higher by Rs 181 (0.31%) at Rs 57,708/Kg. Prices opened at Rs 57,645/kg and rose to a high of Rs 58,140/Kg during the day's trading.