Sudden rise for precious metals

Bullion metal prices ended higher on Monday, 20 May 2013. Comex gold and silver futures prices suddenly surged higher near midday on Monday, to reverse early, substantial losses and then ended the U.S. day session higher and near their daily highs. Heavy short covering and bargain hunting were featured during the precious metals' turnarounds. The key outside markets were also in a bullish posture for gold, silver on Monday, as the U.S. dollar index was lower, and crude oil prices were higher.

Gold for June delivery ended higher by $19.4 (1.4%) at $1,384.1 an ounce on the Comex division of the New York Mercantile Exchange on Monday. Gold rose for first time in eight sessions.

July silver ended higher by $0.23 cents (1%) at $22.58 an ounce on Monday.

There was also a report released at midday on Monday that could have sparked some safe-haven buying demand for gold. Moody's reportedly said if the U.S. fails to act on its budget problems in 2013, then the ratings agency might downgrade U.S. government debt.

Gold and silver futures got off to another rocky start to begin the trading week. Both markets were under strong pressure in overnight and in early morning U.S. action. One report overnight said investors worldwide have dumped around $22 billion worth of gold exchange traded funds (ETFs) over the last nearly five months. The big rally in the U.S. and Japanese stock markets, a stronger U.S. dollar, and low inflation expectations worldwide are major bearish weights on the metals and entire raw commodity sector at present.

Expectations that monetary stimulus by the U.S. Federal Reserve will soon come to an end have also hit gold prices. Fed Chairman Ben Bernanke on Wednesday will testify before the Joint Economic Committee about the central bank's economic outlook and the FOMC will release minutes from its most recent policy meeting.

At the MCX, gold prices for June delivery closed higher by Rs 253 (1%) at Rs 26,088 per ten grams. Prices rose to a high of Rs 26,339 per 10 grams and fell to a low of Rs 25,373 per 10 grams during the day's trading.

At the MCX, silver prices for July delivery closed higher by Rs 634 (1.5%) at Rs 43,263/Kg. Prices opened at Rs 42,550/kg and rose to a high of Rs 44,294/Kg during the day's trading.

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