Gold stays steady while silver shines
Precious metals ended mixed on Wednesday, 27 May, 2009 at Comex. Gold ended almost flat while silver gained. Gold stayed steady due to the rising dollar and the stronger than expected housing data.
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 Wednesday, Comex Gold for June delivery rose $0.2 (0.006%) to close at $953.5 an ounce on the New York Mercantile Exchange. Earlier during the day, it fell to a low of $946.6 but also rose to a high of $959.6. Last week, gold ended higher by 3%. Year to date, gold prices are higher by 9.7%.
For the month of April, gold had lost 3.7%, the second consecutive monthly drop. For the month of March, gold fell 2.1%, down for the first month in five. But the metal gained 4.3% in the first quarter. Before March, for the month of February, gold ended higher by 7.4%. For January, 2009, gold had gained 3.9%.
On 17 March, 2008 prices had skyrocketed to a high of $1,034/ounce. But prices have dropped somewhat (8%) since then.
On Wednesday, Comex silver futures for July delivery rose 26.5 cents (1.8%) at $14.865 an ounce. Year to date, silver has climbed 30.2% this year. For 2008, silver had lost 24%.
In the currency market on Wednesday, the U.S. dollar index, rose 0.4%. The greenback advanced against most of its major rivals as a mixed batch of U.S. housing data and worries that rising interest rates might limit an economic recovery.
The Federal Agency reported on Wednesday, 27 May, for April, home prices fell 0.5% in the first quarter of the year and were down 7.3% in the past year. The FHFA price index measures sales of the same homes over time, and is therefore not influenced by a different mix of homes sold in a period as the median sales price is.
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 June delivery closed higher by Rs 50 (0.34%) at Rs 14,622 per 10 grams. Prices rose to a high of Rs 14,707 per 10 grams and fell to a low of Rs 14,491 per 10 grams during the day's trading.
At the MCX, silver prices for July delivery closed Rs 416 (1.8%) higher at Rs 23,165/Kg. Prices opened at Rs 22,650/kg and rose to a high of Rs 23,347/Kg during the day's trading.
