Big gains for precious metals

Gold ends at three and half months high while silver ends at five and half months high

Bullion metal prices ended substantially higher on Tuesday, 28 February 2012 at Comex. Comex April gold futures prices ended the U.S. day session at three and half month highs while silver ended at six and half month highs as value-buying and a lower dollar lifted the metals.

Gold for April delivery ended higher by $13.5 or 0.8%, to end at $1,788.4 an ounce on the Comex division of the New York Mercantile Exchange on Tuesday. Year-to-date, gold has gained 14%, while prices have risen 2.8% on the month of February 2012. Gold ended the month of January higher by 11%. For the year 2011, gold rose 10%.



On Tuesday, silver prices for March delivery ended higher by $1.62 or 4.6% at $37.14. So far this year, silver futures have gained 33%. Monthly gains have topped 13%. For the month of January, silver gained 19%. For the year 2011, silver shed almost 11%.

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

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.

On the European Union sovereign debt crisis front Tuesday, the Standard & Poors ratings agency said Greece is in a default status in its ratings. That move was not surprising. There was a decent Italian bond auction on Tuesday. Traders are awaiting another European Central Bank liquidity infusion on Wednesday to see how it is received by the market place. This entire EU situation is a major underlying bullish factor for safe-haven gold.

Among domestic data awaited at Wall Street, Consumer confidence report showed that confidence is the highest in a year, with more optimism about jobs. The research group's gauge of U.S. consumer confidence rose to 70.8 in February from 61.5 in January. A prior estimate for January pegged the level at 61.1.

The durable goods order report showed that orders for long-lasting U.S. goods fell a bigger-than-expected 4.0% in January, as demand for a broad array of products declined. Market had expected durable-goods orders to fall a seasonally adjusted 1.3%, largely because of lower aircraft orders and the year-end expiration of a temporary business tax credit. Shipments of all durable goods rose 0.4% in January. Inventories of durable goods climbed 0.7% last month to a record high.

At the MCX, gold prices for April delivery closed higher by Rs 135 (0.5%) at Rs 28,875 per ten grams. Prices rose to a high of Rs 28,938 per 10 grams and fell to a low of Rs 28,661 per 10 grams during the day's trading.

At the MCX, silver prices for May delivery closed higher by Rs 2,449 (4.04%) at Rs 62,930/Kg. Prices opened at Rs 60,357/kg and rose to a high of Rs 63,074/Kg during the day's trading.