Precious metals shine

Prices move up in late buying as weak stock markets provide support

Bullion metal prices ended higher on Tuesday, 10 April 2012 at Comex. Comex gold futures prices ended a choppy trading session with solid price gains on a late surge that saw fresh safe-haven investment demand featured. Weaker stock markets and some fresh jitters coming out of the European Union worked to support the safe-haven demand for gold Tuesday.

Gold for June delivery ended higher by $16.8 or 1%, to end at $1,660.7 an ounce on the Comex division of the New York Mercantile Exchange on Tuesday. The metal traded as low as $1,632.5. The metal had shed 2.5% last week.



On Tuesday, silver prices for May delivery ended higher by $0.15 or 0.5% at $31.68. Last week silver lost 2.3%.

The European stock markets were lower overnight as European traders returned from their four-day Easter holiday. European stocks were pressured on the weak U.S. jobs report Friday and some fresh, weak economic data coming out of China. Also, Spanish and Italian bond yields were on the rise again, which signals the European Union debt crisis, which had been simmering on the back burner, could be heating up again. The weaker European stocks spilled over into selling pressure in the U.S. stock indices on Tuesday.

Friday's more downbeat U.S. jobs data continued to be supportive for the gold and silver because it does keep the specter of another round of quantitative easing from the U.S. Federal Reserve on the table, albeit the argument for such is still a weak one at this point.

The Labor Department in US reported on last Friday, 05 April that the US economy in March added the fewest number of jobs in five months, breaking a string of strong employment gains and raising questions about the strength of the U.S. recovery. As per the report, the U.S. generated 120,000 jobs last month, well below expectations. Market had expected an increase of 210,000, seasonally adjusted. Hiring also failed to top the 200,000 mark for the first time since November.

The March report also showed that while the unemployment rate fell to 8.2%, the lowest level since January 2009, the decline stemmed entirely from people dropping out of the labor force. It's the first time that's happened this year. That's usually a negative sign because it suggests jobs have become somewhat harder to find.

In the currency market on Tuesday, the Dollar Index, which weighs the strength of dollar against basket of six other currencies rose by almost 0.15%.

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 June delivery closed higher by Rs 304 (1.1%) at Rs 28,633 per ten grams. Prices rose to a high of Rs 28,678 per 10 grams and fell to a low of Rs 28,320 per 10 grams during the day's trading.

At the MCX, silver prices for May delivery closed higher by Rs 365 (0.65%) at Rs 56,267/Kg. Prices opened at Rs 56,040/kg and rose to a high of Rs 56,400/Kg during the day's trading.