Precious metals shine

Weak dollar push prices higher

Precious metals ended higher on Tuesday, 24 May, 2011 at Comex. Prices rose on Tuesday following a weak dollar as ongoing problems of the Eurozone pushed investors towards bullions as a safer investment bet.

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 $7.9 or 0.5%, to end at $1,523.3 an ounce on the Comex division of the New York Mercantile Exchange on Tuesday. During intra day trading, it reached a high of $1,529. Last week, gold gained 1%. Gold ended the month of April higher by 8.1%.

For the year till date, gold is up by 8.1%. 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.

On Tuesday, silver prices for July delivery rose $1.22 (3.5%) to end at $36.15. During intra day trading, it reached a high of $36.4. Last week, silver gained 0.3%. Silver ended the month of April higher by 28%.

Silver prices have gained 14.7% 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 Tuesday, the dollar index, which weighs the strength of the dollar against a basket of six other currencies, ended the day lower by 0.4%.

Concerns about the state of finances among countries in the eurozone periphery returned to the forefront this week via a downwardly revised outlook for Italy's debt and a downgrade on the debt of Greece during the last weekend.

The U.S. dollar dipped on Tuesday as Federal Reserve official James Bullard said the central bank is likely to keep policy rates on hold after the second round of quantitative easing.

At the MCX, gold prices for June delivery closed higher by Rs 81 (0.4%) at Rs 22,382 per ten grams. Prices rose to a high of Rs 22,430 per 10 grams and fell to a low of Rs 22,263 per 10 grams during the day's trading.

At the MCX, silver prices for July delivery closed higher by Rs 1,720 (3.2%) at Rs 55,031/Kg. Prices opened at Rs 53,440/kg and rose to a high of Rs 55,290/Kg during the day's trading.