Bright day for bullions

Prices supported on inflation news out of China

Bullion metal prices ended higher on Tuesday, 09 July 2013 at Comex. Prices ended the U.S. day session moderately higher on Tuesday, supported in part on inflation news out of China, and follow-through buying strength from Monday's gains. A stronger U.S. dollar index did limit the upside in both gold and silver markets on Tuesday.

Gold for August delivery ended higher by $11 (0.9%) at $1,245.9 an ounce on the Comex division of the New York Mercantile Exchange on Tuesday.

September silver ended lower by $0.10 (0.5%) at $19.14 an ounce on Tuesday.

Gold prices were boosted on Tuesday on news that China's inflation rate heated up a bit in June. China's June consumer price index was up 2.7% on an annualized basis, compared to a 2.1% rate in May and above the consensus forecast for a 2.5% rise. Gold and other hard assets have traditionally been used as a hedge against inflationary price pressures. The China inflation news coincides with the recent surprisingly sharp rise in U.S. bond yields and home mortgage rates.

The civil unrest in Egypt is still a front-burner issue for the world market place. There were no major developments on Tuesday, but the situation still has traders uneasy. The crisis in Egypt could quickly escalate and even spread to other countries in the Middle East. Gold has seen some safe-haven investor demand due to the recent political upset and violence in Egypt.

The market place is awaiting the Wednesday release of China's latest trade report and the minutes of the last U.S. Federal Reserve FOMC meeting. These two data points are the most important economic readings of the week.

The U.S. dollar index, which weighs the strength of the dollar against a basket of six other currencies, rose by 0.7% on Tuesday. It puts the Dollar Index on pace for its best close in three years. Much of today's greenback strength has come at the expense of the euro and the Swiss franc.

At the MCX, gold prices for August delivery closed lower by Rs 97 (0.4%) at Rs 26,010 per ten grams. Prices rose to a high of Rs 26,296 per 10 grams and fell to a low of Rs 25,976 per 10 grams during the day's trading.

At the MCX, silver prices for September delivery closed lower by Rs 220 (0.54%) at Rs 40,168/Kg. Prices opened at Rs 40,441/Kg and fell to a low of Rs 40,118/Kg during the day's trading.

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