Precious metals rise

Weaker dollar and disappointing U.S. economic data push prices higher

Bullion metal prices ended higher on Monday, 03 June 2013. Prices rose following weaker dollar and mixed set of economic report at Wall Street.

Gold for August delivery ended higher by $18.9 (1.4%) at $1,411.9 an ounce on the Comex division of the New York Mercantile Exchange on Monday.

July silver ended higher by $0.48 cents (2.2%) at $22.72 an ounce on Monday.

The much-anticipated economic data from China over the weekend was a mixed bag for traders and investors. China's official purchasing managers' index rose to 50.8 in May versus 50.6 in April, which was higher than expectations. However, the HSBC China manufacturing PMI fell to 49.2 in May compared to 50.4 in April. Chinese stock markets weakened on the fresh economic data, but other markets saw little impact from the data.

Japan's stock market fell sharply again in overnight trading as it appears the major bull run in the Nikkei stock index has ended. The Nikkei has dropped by 17% in less than two weeks' time. The Euro zone's manufacturing sector activity fell at its slowest pace in more than one year in May, it was reported Monday. The Euro zone PMI rose to 48.3 in May from 46.7 in April. Any PMI reading below 50.0 suggests contraction. The decrease in the rate of decline in the PMI did hint the Euro zone economy has bottomed out and could be on the rebound.

Traders and investors will get some major economic news later this week when the European Central Bank holds its monthly meeting on Thursday, followed by Friday's U.S. employment report.

Reports of good demand for physical gold are also supporting the yellow metal. News reports Monday said the Indian government could implement further measures to reduce what has been strong consumer demand for gold in recent weeks.

In the currency market, the dollar index, which weighs the strength of the dollar against a basket of six other currencies, fell by 0.4%.

Regarding economic data expected at Wall Street, The ISM Manufacturing Index fell to 49.0 in May from 50.7 in April. That was the first contraction in the ISM Index since November 2012, and the lowest reading since June 2009. The consensus expected the index to increase modestly to 50.9.

Looking at today's remaining economic data, construction spending increased 0.4% in April after declining an upwardly revised 0.8% (from -1.7%) in March. The consensus expected construction spending to increase 1.1%. Residential construction, which was supposed to be a positive contributor to construction spending growth in April, fell 0.1%. The drop was the result of a sharp decline in home improvement spending (-3.2%).

At the MCX, gold prices for June delivery closed higher by Rs 362 (1.3%) at Rs 27,340 per ten grams. Prices rose to a high of Rs 27,399 per 10 grams and fell to a low of Rs 26,951 per 10 grams during the day's trading.

At the MCX, silver prices for July delivery closed higher by Rs 910 (2.1%) at Rs 43,616/Kg. Prices opened at Rs 43,636/kg and rose to a high of Rs 44,686/Kg during the day's trading.

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