Bright day for precious metals

Prices witness largest one-day rise in three months time

Precious metals jumped substantially higher on Friday, 28 January 2011 at Comex. Prices registered largest one-day rise in more than a month as unrest increased in Egypt and USA's fourth quarter GDP rose less than expected.

On Friday, gold for February delivery ended higher by $22.3 (1.7%) at $1,340.7 mark on the New York Mercantile Exchange. This was gold's largest one-day rally since early November. Earlier during the week, the yellow metal slipped to multi month lows. For the week, gold ended almost flat. Gold prices have dropped 5.6% this year till date.



For the year of 2010, gold ended higher by 30%, its tenth consecutive yearly gain.

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 bullion metals have registered increase in prices despite strong dollar in recent times and vice versa.

On Friday, March Comex silver futures ended higher by $0.89 (3.3%) at $27.92. That was silver's largest one day gain since late December. Prices gained 1.8% for the week. Prices have shed 8.2% this year till date.

In FY 2010, silver ended higher by 83.7%.

In the currency market on Friday, the dollar index traded with strength for the entire day and ended 0.6% higher.

Among economic data expected for the day, the Commerce Department on Friday reported that gross domestic product rose at a 3.2% annual rate in the fourth quarter, faster than the 2.6% pace seen during the third quarter. But market had expected 3.5% growth for the fourth quarter.

Also on Friday, a report showed that the gauge of consumer sentiment dipped to 74.2 in January from 74.5 in December on concerns about rising food and fuel prices.

Bullion metal prices are expected to continue with their joyride in the coming months with gold expected to reach between $1,600 and $1,700 an ounce and silver likely to attempt to test highs in the $50 area.