Bullions shine

Higher crude price and weak dollar help prices go up

Precious metal prices ended higher on Tuesday, 10 January 2012 at Comex. Bullion futures prices ended the U.S. day session stronger and the same was aided by higher crude prices and weak dollar.

Gold for February delivery ended higher by $23.4 or 1.5%, to end at $1,631.5 an ounce on the Comex division of the New York Mercantile Exchange on Tuesday. It traded between a high of $1,641.4 and a low of $1,609.2 earlier during the day. Last week, gold gained 3.2%. For the year 2011, gold rose 10%.



On Tuesday, silver prices for March delivery rose $1.03 or 3.6% to end at $29.82. Last week, silver rose 2.7%. For the year 2011, silver shed almost 11%.

Crude oil prices traded solidly higher on Tuesday. With Nymex crude oil trading well above $100 a barrel and prices hitting a fresh seven-month high last week, that was an underlying bullish factor for the precious metals. Gold was also finding support in lingering concerns about Iran's threats to close off the Strait of Hormuz, a critical conduit for oil tankers.

In the currency market on Tuesday, the Dollar Index, which weighs the strength of dollar against basket of six other currencies fell by almost 0.2%. The dollar spent the session trading narrowly below the neutral line. The euro advanced against the dollar as International Monetary Fund Managing Director Christine Lagarde and German Chancellor Angela Merkel readied for a meeting in Greece.

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.

Trade data from China's government showed that nation's import growth declining to a two-year low last month, raising expectations for monetary easing for the country. China's trade surplus widened in December markedly as exports remained resilient while imports weakened, although full-year figures pointed to an overall narrowing trend for the Chinese trade gap. Imports were up 11.8% in December, compared with expectations of 18% growth and an increase of 22.1% in November.

At the MCX, gold prices for February delivery closed lower by Rs 41 (0.14%) at Rs 27,537 per ten grams. Prices rose to a high of Rs 27,639 per 10 grams and fell to a low of Rs 27,476 per 10 grams during the day's trading.

At the MCX, silver prices for March delivery closed higher by Rs 817 (1.6%) at Rs 52,566/Kg. Prices opened at Rs 51,755/kg and rose to a high of Rs 53,019/Kg during the day's trading.