Bright day for bullions

Prices rise on the face of a strong dollar

Precious metals ended substantially higher on Monday, 18 July, 2011 at Comex. Gold struck record high. Silver also shone. Concerns about the euro-zone debt crisis and the lack of agreement on raising the U.S. debt ceiling prompted investors to seek a safe haven in the precious metal. Prices rose on the face of a strong dollar.



Gold for August delivery rose $12.3 or 0.8%, to end at $1,602.4 an ounce on the Comex division of the New York Mercantile Exchange on Monday. It was tenth consecutive rise for the yellow metal and an all time high for the metal. During intra day trading, prices rose to a high of $1,607.9.

Gold ended June 2011 lower by 2.2%. It ended second quarter higher by 4.4%. For the first quarter of FY 2011, gold ended higher by 1.3%. On a year to date basis, gold prices are now higher by 13%. During 2010, gold ended higher by 30%, its tenth consecutive yearly gain.

On Monday, silver prices for September delivery rose by $1.27 (3.3%) to end at $40.34. Silver ended the month of June lower by 9% followed by a 21% drop in May.

Silver prices ended the second quarter lower by 8%. Silver eked out a gain of 22% for the first quarter of this year. In FY 2010, silver ended higher by 83.7%.

In Europe, Italian and Spanish government-bond yields rose sharply. Continuing uncertainty over the ability of European officials to agree on a second aid program for Greece and stop the crisis from spreading to other countries such as Spain and Italy spooked investors. They tend to buy gold as a storer of value during times of financial turmoil.

Meanwhile, worries about rising inflation, enhanced by the possibility of the injection of further stimulus into the U.S. economy, have also supported gold, which is seen as a hedge against inflation. The impasse in the U.S. debt-ceiling talks has further added to bullions' appeal.

In the currency market on Monday, the dollar index, which measures the strength of the dollar against a basket of six other currencies, rose by almost 0.4% after rising 1% earlier during the day.

At the MCX, gold prices for June delivery closed higher by Rs 156 (0.7%) at Rs 23,227 per ten grams. Prices rose to a high of Rs 23,291 per 10 grams and fell to a low of Rs 23,094 per 10 grams during the day's trading.

At the MCX, silver prices for September delivery closed higher by Rs 1400 (2.4%) at Rs 59,873/Kg. Prices opened at Rs 58,700/kg and rose to a high of Rs 60,523/Kg during the day's trading.