Currencies
US dollar index lost 0.96 % on Friday last week while on weekly basis it fell by approximately 1.3%. While against Euro, the dollar fell by 1.4% for the week ended on 8th April, 2011. Dollar traded weak throughout the week against basket of major currencies. Euro became strong against US dollar as expected 25 basis point rate hiked by (ECB) European Central Bank. The ECB hiked interest rate from 1% to 1.25%.
The reason for decline in USD was mainly because of investors unwinded their positions from USD and shifted their focuss on riskier commodities on growing optimism of global economic recovery.
Even better than expected US jobless claims data could not provide support to the greenback.
Bullion
Gold prices were going up constantly in the last week. Gold future prices rose by approximately one percent on Friday last week while on weekly basis it settled at 1474.1 USD per ounce higher by more than three percent. Gold prices went up as dollar became weak which boosted the metal’s demand as an alternative asset and also because of inflation hedge as Crude also went up last week by approximately 4.5 percent.
Gold prices were rising in the last week on the back of speculative and investment demand and physical demand of Gold was not seen picking up in the last week.
Silver prices has tested multi year high levels above $40 per ounce and last traded at $40.6 per ounce. Silver prices gained by 2.6% on last Friday and more than 7.5 percent in the last week. Silver continued outperforming Gold from last three months and likely to give better returns in the coming months also as compared to Gold. Silver gained by more than 45% in last three months while Gold gave return of more than 10 percent in the said period. Silver prices are seen rising further and heading towards 44 dollar per ounce mark.
Gold and silver prices have risen in recent past was also because of investment demand from hedge fund houses where Silver prices have risen with abnormal speed which may trigger sell off and may fall on profit bookig and correct by 15-20 percent in near term.
Any correction in bullion prices is a good long term investment opportunity for investors as Gold and Silver prices are still in medium and long term uptrend. Gold prices are seen rising in next couple of years and may touch 1800-2000 $ per ounce. And Silver could test $ 55 per ounce levels in the next couple of years.
Long term investors can buy silver somewhere around $ 33-35 per ounce keeping a stop loss of 29 dollar mark and can wait for the targets of 48-55 levels in long term.
