Precious metals oscillate for entire day

Register marginal changes at the end

Precious metals fluctuated between red and green on Wednesday, 16 February 2011 at Comex. Prices wavered between small gains and losses throughout the session as tensions in the Middle East, as well as worries about inflation and the European sovereign debt crisis, supported buying, but the metal had felt the pinch of a stronger dollar.



On Wednesday, gold for April delivery ended higher by $1 (0.07%) at $1,375.1 mark on the New York Mercantile Exchange. Last week, gold ended higher by 0.8%. For the year, gold has dropped by 3.3% 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 Wednesday, March Comex silver futures pared early gains and ended lower by $0.07 (0.2%) at $30.63. Prices gained 4.4% last week. Prices have shed 9% this year in January. For the year till date, silver is lower by 0.2%.

In FY 2010, silver ended higher by 83.7%.

In the currency market on Wednesday, the dollar index, which weighs the strength of the dollar against a basket of six other currencies, rose initially but then slipped by 0.3%.

Economic data on Wednesday showed that producer prices for January increased by 0.8%, which is slightly greater than the 0.7% increase that had been generally expected. Producer prices had increased 1.1% in the prior month. As for core producer prices, they increased a more tepid 0.5% month over month, but that is still sharper than the 0.2% increase that had been widely expected after a 0.2% increase in the prior month.

Housing starts for January spiked 14.6% month over month to an annualized rate of 596,000. Market was expecting a figure around 540,000. The surge makes for a sharp rebound from the downwardly revised 5.1% decline that was reported for the prior month. Building permits for January dropped 10.4% from the prior month to an annualized rate of 562,000. January building permits had been widely expected to come in at 575,000.

Industrial production for January fell 0.1%, which contrasts with the call for a 0.6% increase.

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.

At the MCX, gold prices for April delivery closed higher by Rs 6 (0.02%) at Rs 20,506 per ten grams. Prices rose to a high of Rs 20,572 per 10 grams and fell to a low of Rs 20,425 per 10 grams during the day's trading.

At the MCX, silver prices for March delivery closed Rs 127 (0.3%) lower at Rs 46,263/Kg. Prices opened at Rs 46,421/kg and fell to a low of Rs 45,804/Kg during the day's trading.