Precious metals turn higher

Prices shine as crude soars and dollar drops

Precious metal prices shot up on Monday, 04 April 2011 at Comex. Prices rose in tandem with higher crude prices, which induced fears of inflation. Additionally, a weak dollar also pushed prices higher. Silver closed at new 31 year high levels.

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 fell $4.1, or 0.3%, to end at $1,433 an ounce on the Comex division of the New York Mercantile Exchange. Last week, gold gained 0.2%.

For the year till date, gold is down by 3.6%. 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.

Higher oil prices additionally in recent times helped gold not only by heightening fears of inflation but also by pushing pan-commodities indexes higher. On Monday, crude shed early weakness and ended higher at 30-month high levels.

In the currency market on Monday, the dollar index, which weighs the strength of the dollar against a basket of six other currencies, stayed weak for the entire session but reversed course later in the day.

On Monday, silver prices for May delivery rose 76 cents (2%) to end at $38.49. Last week, silver gained 1.8%. Prices have gained 23.6% 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%.

At the MCX, gold prices for June delivery closed lower by Rs 2 (0.01%) at Rs 20,943 per ten grams. Prices rose to a high of Rs 21,015 per 10 grams and fell to a low of Rs 20,917 per 10 grams during the day's trading.

At the MCX, silver prices for May delivery closed higher by Rs 798 (1.4%) at Rs 56,682/Kg. Prices opened at Rs 55,991/kg and rose to a high of Rs 56,765/Kg during the day's trading.