Search Now

Recommendations

Wednesday, February 08, 2012

Bullions add glaze


Precious metals rise as dollar slips and Greece nears a deal finalization

Yellow metal prices ended higher for first time in three days on Tuesday, 07 February 2012 at Comex. Both gold and silver rose as the dollar slipped and after Greece reportedly neared a deal that would pave the way to more international financial aid to the embattled euro-zone country. Part of the rally in precious metals on Tuesday is attributed to Fed Chairman Ben Bernanke telling the U.S. Senate that despite last Friday's stronger-than-expected U.S. jobs report, the U.S. economy remains overall weaker than many realize.

Gold for April delivery ended higher by $23.5 or 1.4%, to end at $1,748.4 an ounce on the Comex division of the New York Mercantile Exchange on Tuesday. It overcame a weak start, picking up momentum as the dollar turned lower on the Greek reports. Higher crude price also attributed to the rise. Last week, gold gained 0.5%.



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 44 cents or 1.3% at $34.19. Last week, silver shed 0.1%. 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 0.44%.

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.

Fed Chairman Bernanke delivered a testimony to the Senate Budget Committee today, but his comments came without surprise since they mirrored those delivered last week to the House Budget Committee. In Washington, top U.S. central banker Bernanke reiterated his call on lawmakers to cut the nation's long-term red ink, and repeated that the labor market is a long ways from returning to good health.

The European Union sovereign debt crisis was back in the financial news headlines today. Weaker-than-expected German economic data helped to pressure the Euro currency against the U.S. dollar on Tuesday. A debt- restructuring deal between the Greek government and the private sector has still not been reached, but there were a report today that a deal is very close. That also helped to rally the Euro currency and pressure the dollar index.

At the MCX, gold prices for April delivery closed higher by Rs 437 (1.6%) at Rs 28,373 per ten grams. Prices rose to a high of Rs 28,404 per 10 grams and fell to a low of Rs 27,870 per 10 grams during the day's trading.

At the MCX, silver prices for March delivery closed higher by Rs 839 (1.5%) at Rs 57,265/Kg. Prices opened at Rs 56,350/kg and rose to a high of Rs 57,400/Kg during the day's trading.