Modest weekly gains for precious metals

Eurozone's debt problems push prices higher

Precious metals ended higher on Friday, 20 May, 2011 at Comex. Prices rose as Eurozone's debt problems resurfaced. Prices added to their gains despite a strong dollar.

Gold for June delivery rose $16.5 or 1.1%, to end at $1,508.9 an ounce on the Comex division of the New York Mercantile Exchange on Friday. For the week, gold gained 1%. Gold ended the month of April higher by 8.1%.



For the year till date, gold is up by 7.2%. For the first quarter of FY 2011, gold ended higher by 1.3%. During 2010, gold ended higher by 30%, its tenth consecutive yearly gain.

Recent data from the World Gold Council showed during the week that gold demand rose in the first quarter by 11% year on year with China and India accounting for 63% of total demand.

On Friday, silver prices for July delivery rose $0.16 (0.4) to end at $35.09. For the week, silver gained 0.3%. Silver ended the month of April higher by 28%.

Silver prices have gained 11.7% until date this year. Silver eked out a gain of 22% for the first quarter of this year. In FY 2010, silver ended higher by 83.7%.

In the currency market on Friday, the dollar index, which weighs the strength of the dollar against a basket of six other currencies, ended the day higher by 0.3%. The euro was the only currency to lose against the dollar.

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.

The single currency lost against the dollar as concerns surfaced those potential new regional governments in Spain could unearth more debt problems and change the political landscape in the key euro-zone periphery country. Spain's economy is bigger than the economies of Portugal, Ireland and Greece combined. Those three countries have asked for bailouts in the face of rising debt imbalances.