Bright day for bullions

Prices end near the daily high as Greece and the European Union secure a debt-restructuring deal

Bullion metal prices ended higher and near the daily high on Tuesday, 21 February 2012 at Comex. The precious metals markets were boosted by news that Greece and the European Union have finally secured a debt-restructuring deal. The key outside markets were also in a bullish daily posture for gold and silver, as the U.S. dollar index was weak and crude oil prices were sharply higher. U.S. markets were closed Monday for the Presidents Day holiday.

Gold for April delivery ended higher by $32.6 or 1.9%, to end at $1,758.5 an ounce on the Comex division of the New York Mercantile Exchange on Tuesday. Earlier, it rose to a high of $1,762.5.



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 $1.21 or 3.7% at $34.43. For the month of January, silver gained 19%. For the year 2011, silver shed almost 11%.

Latest news indicate that eurozone officials finally agreed to give flagging Greece another round of bailout funds. In Brussels, euro-area finance ministers approved another rescue for debt-encumbered Greece. The 130 billion euros, or $173 billion, financial package still left doubts, however, about how durable the fix would prove. Also, a private-sector bond swap is set to be launched this week. Private bondholders will take writedowns of 53% on the value of their holdings, up from an earlier proposal for haircuts of around 50% agreed in March.

The decision by China's leaders to reduce the reserve requirement ratio on their country's banks also gave a boost to prices.

In the currency market on Tuesday, the Dollar Index, which weighs the strength of dollar against basket of six other currencies fell initially but ultimately rose by almost 0.14%. The dollar edged up against the euro on Tuesday in the wake of a euro-zone agreement to approve a long-awaited bailout for Greece.

U.S. stocks gained and bonds fell, indicating the deal made investors feel more confident shifting to riskier from safer assets, which initially boosted the euro.

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.

At the MCX, gold prices for April delivery closed higher by Rs 222 (0.8%) at Rs 28,380 per ten grams. Prices rose to a high of Rs 28,435 per 10 grams and fell to a low of Rs 28,137 per 10 grams during the day's trading.

At the MCX, silver prices for March delivery closed higher by Rs 837 (1.5%) at Rs 57,157/Kg. Prices opened at Rs 56,348/kg and rose to a high of Rs 57,300/Kg during the day's trading.