Bullions end mildly lower

Higher dollar index takes some shine away

Precious metal prices ended little lower on Monday, 30 January 2012 at Comex. Comex February gold futures prices ended the U.S. day session slightly lower on a mild corrective and profit-taking pressure after prices last Friday hit a seven-week high. The higher U.S. dollar index and weaker crude oil prices also affected prices. Support for the metals came amid tensions in the euro zone.

Gold for April delivery ended lower by $1 or 0.1%, to end at $1,734.4 an ounce on the Comex division of the New York Mercantile Exchange on Monday. It fell to a low of $1,718.8 and rose to a high of $1,742.8 during intra day trading. Last week, gold gained 4.2%. For the year 2011, gold rose 10%.



On Monday, silver prices for March delivery fell $0.26 or 0.8% to end at $33.53. Last week, silver rose 6.7%. For the year 2011, silver shed almost 11%.

In the currency market on Monday, the Dollar Index, which weighs the strength of dollar against basket of six other currencies rose by almost 0.3%.

There were fresh developments coming out of the European Union debt crisis on Monday. Reports said Greece's private sector and government talks on debt restructuring have made some progress but still have not come to a complete resolution, with patience growing thin among the participants.

There was a fairly well subscribed Italian debt auction Monday, but bond yields in Portugal rose to Euro era highs of around 16% on Monday. There was yet another European Union summit meeting scheduled for Monday afternoon. The Euro currency was under some pressure Monday, which has in turn helped to boost the U.S. dollar index.

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 bullions have registered increase in prices despite strong dollar in recent times and vice versa.

Among economic reports expected for the day on Monday, the Commerce Department reported that U.S. consumer spending came to a virtual standstill in December after climbing 0.1% the month before. U.S. consumers spent less in December and saved more as their incomes rose sharply. The report showed that personal income jumped 0.5% last month, while personal spending fell less than 0.1%. Market had forecast income to rise by 0.4% and spending by 0.1%. Disposable income, the money left over after taxes climbed 0.3% last month, adjusted for inflation. The more cautious approach to spending helped consumers boost their savings rate to 4.0% from 3.5% in November.

The rally among precious metals is expected to continue into coming days and possibly close out the month of January with a gain. Countries that celebrate the Lunar New Year, such as China, has returned to work. Also, the momentum that started following the dovish statement by the Federal Open Market Committee on its long-term interest rate outlook will likely continue.

At the MCX, gold prices for April delivery closed higher by Rs 66 (0.23%) at Rs 28,450 per ten grams. Prices rose to a high of Rs 28,492 per 10 grams and fell to a low of Rs 28,240 per 10 grams during the day's trading.

At the MCX, silver prices for March delivery closed lower by Rs 237 (0.41%) at Rs 56,992/Kg. Prices opened at Rs 57,090/kg and fell to a low of Rs 56,425/Kg during the day's trading.