Gold, Silver continued to advance on Middle East unrest

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Precious metals advanced in the Indian bullion market today on the back of tracking firm global cues. April future rose as much as 0.63% to Rs. 21,232.00 per 10 grams, while silver future for May contract surged 1.93% to Rs. 54,450.00 per kg on the Multi Commodity Exchange (MCX).

April future climbed 0.70% to $1,438.7 per ounce on the COMEX as political tensions intensified in the Middle East nations and crude oil continued to gain on fear of supply disruption, boosting the demand for precious metal as a hedge against uncertainties and inflation. The concern about rising inflation and currency devaluation lifted the gold prices 30% last year for the 10th annual gain.

“Rising oil prices and escalating clashes in Libya and tensions in other key Middle Eastern countries continued to support safe-haven buying for precious metals,” Mark Pervan, analyst at ANZ Banking Group Ltd., wrote in a report today.

However, fighting between Libyan rebels and supporters of Muammar Qaddafi strengthened as opposition advanced the turmoil in west from the oil hub of Ras Lanuf toward the leader’s hometown of Sirte. Some websites call for a nationwide “Day of Rage” in Saudi Arabia on March 11 and March 20, 2011.

“A civil war could be the unfortunate outcome and normal oil production from Libya may not be restored in the short term,” said Ong Yi Ling, Singapore-based analyst with Phillip Futures Pte Ltd. “Besides Libya, investors may also watch the situation in Saudi Arabia closely. Should the turmoil spread to the world’s largest oil exporters, we could witness spikes in oil and gold prices.”

At MCX, Gold Future for April contract closed traded at Rs 21,216.00 per 10 grams, up by 0.55%, after opening at Rs 21,111.00 against the previous close price of Rs. 21,098.00. It touched the intra-day high of Rs. 21,232.00 per 10 grams till the trading. (At 12:12 PM today).

At COMEX, gold future for April contract traded at $1,437.9 per ounce, up by $9.3, after opening at $1,435.0 against the previous close price of $1,428.6 per ounce. It touched the intra-day high of 1,438.8 with a business volume of 16,341 lots. (At 12:11 PM today).

Silver for May contract, at MCX, traded at Rs 54,430.00, up by 1.90%, after opening at Rs 53,500.00 against the previous close price of Rs. 53,417.00. It touched the intra-day high of Rs. 54,489.00 till the trading. (At 12:10 PM today).

Moreover, Hedge funds enlarged their net-long positions on gold in the week ended March 1, 2011 due ongoing geo-political tensions in the Middle East. Managed money funds increased their positions 9% to 186,988 futures and options contract, according to Commodity Futures Trading Commission (CFTC) report
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