Precious metals climb up

Gold settles at five-week highs

Precious metal prices ended higher on Tuesday, 17 January 2012 at Comex. Yellow metal prices ended the U.S. day session with solid gains, but down from the session high, and hit a fresh five-week high on Tuesday. A lower U.S. dollar index and higher crude oil prices helped boost bullions on Tuesday. U.S. markets were closed for a holiday on Monday, 16 January 2012 and most assets traded sharply higher in the first business day of the week.

Gold for February delivery ended higher by $24.8 or 1.5%, to end at $1,655.6 an ounce on the Comex division of the New York Mercantile Exchange on Tuesday. It was highest settlement for gold in almost five weeks. Last week, gold gained 0.9%. For the year 2011, gold rose 10%.



On Tuesday, silver prices for March delivery rose 61 cents or 2.1% to end at $30.14. Last week, silver rose 3%. For the year 2011, silver shed almost 11%.

Some better-than-expected economic news from China and the European Union Tuesday helped to boost stock and commodity markets, including the precious metals. The Euro currency made some short-covering gains on the EU data, which in turn put some downside price pressure on the U.S. dollar index.

In the currency market on Tuesday, the Dollar Index, which weighs the strength of dollar against basket of six other currencies fell by almost 0.45%.

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.

Crude oil prices traded solidly higher on Tuesday, and moved back above $100.00 a barrel. Light sweet crude for February delivery added $2.01, or 2%, to $100.71 a barrel on the New York Mercantile Exchange.

Among economic data expected at Wall Street today, a gauge of manufacturing in the New York region rose in January, with the Federal Reserve Bank of New York's index rising to 13.5, its highest level since April.

And government figures from China illustrated the slowdown in that nation's economic growth in the fourth quarter of 2011 to have been less than thought, with Beijing pegging China's growth rate at 8.9%. Monthly data also showed better-than-expected retail sales and industrial production in December.

At the MCX, gold prices for February delivery closed higher by Rs 104 (0.4%) at Rs 27,588 per ten grams. Prices rose to a high of Rs 27,778 per 10 grams and fell to a low of Rs 27,495 per 10 grams during the day's trading.

At the MCX, silver prices for March delivery closed higher by Rs 892 (1.7%) at Rs 53,207/Kg. Prices opened at Rs 52,392/kg and rose to a high of Rs 53,874/Kg during the day's trading.