Gold drops but silver manages to shine with the rebounding dollar
After rising for two straight days, bullion metals ended mixed with gold ending little lower on Friday, 20 March, 2009. The rebounding dollar was mainly the reason for this. The yellow metal, anyways, ended higher for the week after the dollar slumped earlier during the week after Fed said that it will buy long term treasuries thereby increasing the appeal of precious metals as a safe haven against alternatives. Fed's recent moves had sparked some good notions about the recovery from the recent recession in US.
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 Friday, Comex Gold for April delivery fell $2.6 (0.3%) to close at $956.2 an ounce on the New York Mercantile Exchange. For the week, the yellow metal ended higher by 2.8%. 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 15.5%.
On 17 March, 2008 prices had skyrocketed to a high of $1,034/ounce. But prices have dropped somewhat (8.9%) since then.
On Friday, Comex silver futures for May delivery rose 32 cents (2.4%) to end at $13.84 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 26% this year. For 2008, silver had lost 24%.
In the currency market on Friday, the dollar index, which weighs the strength of the dollar against a basket of six other currencies, rose for the second time only in last nine sessions. In 2009, year to date, the dollar index has climbed 2.5%.
source: Capital Market
