Prices drop for the second straight day
Bullion metals dropped for the second consecutive day on Tuesday, 17 March, 2009 as stocks rallied in US once again decreasing the appeal of the precious metals. Stocks at Wall Street rallied today buoyed by the financial sector.
Generally, a stronger dollar pressures demand for dollar-denominated commodities, such as crude oil and gold, which become more expensive for holders of other currencies and also vice versa.
On Tuesday, Comex Gold for April delivery fell $5.2 (0.6%) to close at $916.8 an ounce on the New York Mercantile Exchange. Yesterday also, gold had slipped by 0.8%. Last Tuesday, gold had dropped below $900 for first time in two months. Before yesterday, gold had climbed by almost 4% in the past three sessions. Last week, the yellow metal ended lower by 1.5%. For the month of February, gold ended higher by 7.4%. For January, 2009, gold had gained 3.9%. Year to date, gold prices are higher by 3.9%.
On 17 March, 2008 prices had skyrocketed to a high of $1,034/ounce. But prices have dropped somewhat (8.9%) since then.
On Tuesday, Comex silver futures for May delivery fell 22 cents (1.7%) to end at $12.67 an ounce. Last week, silver fell 0.8% In February, 2009, silver had rose 4.3% after climbing 14% in January. Year to date, silver has climbed 10.3% this year. For 2008, silver had lost 24%.
In 2008, gold prices ended higher by 5.5%. The dollar index had gained 12% that year.
Last year, the weakening dollar and higher global demand for raw materials had led to records for commodities including gold. Gold reached a record in March 2008 as a U.S. housing slump and credit crisis spurred the Federal Reserve to slash borrowing costs. In the last move, the Federal Reserve has cuts its target bank lending rate to 0.25% from 5.25% in September, 2007. The Fed did it in nine steps.
Prior to 2008, gold had witnessed the greatest annual gain in twenty eight years by gaining $200/ounce (31%) in FY 2007 as lower interest rates had sent the dollar tumbling, and crude-oil prices rose to a record. Silver had climbed 16% in FY 2007. In 2006, silver had jumped 46% while gold gained 23%.
At the MCX, gold prices for April delivery closed lower by Rs 46 (0.3%) at Rs 15,145 per 10 grams. Prices rose to a high of Rs 15,260 per 10 grams and fell to a low of Rs 15,109 per 10 grams during the day's trading.
At the MCX, silver prices for May delivery closed Rs 233 (1.1%) lower at Rs 21,646/Kg. Prices opened at Rs 21,853/kg and fell to a low of Rs 21,590/Kg during the day's trading.
