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Friday, September 18, 2009

Precious metals turn pale

Prices drop as dollar strengthens

Precious metal prices gave up earlier gains and ended lower on Thursday, 17 September, 2009. Prices fell today as dollar erased earlier losses and firmed up at the end.

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 Thursday, gold for December delivery ended at $1013.5, lower by $6.7 (0.6%) an ounce on the New York Mercantile Exchange. During intra day trading, it rose to a high of $1,025.8. Last week, gold ended higher by 1%. Year to date, gold prices are higher by 15.8%.

Gold ended August, 2009 higher by 0.2%. Before this, for the second quarter, gold ended higher by 0.5%. The metal had gained 4.3% in the first quarter of this year.

On 17 March, 2008 prices had skyrocketed to a high of $1,034/ounce. But prices have dropped somewhat (2%) since then.

On Thursday, Comex silver futures for December delivery fell 16 cents (0.9%) to $17.27 an ounce. Last week, silver ended higher by 2.5%.

Silver ended 7.1% higher for August, 2009. For second quarter, silver rose 4.5%. Year to date, silver has climbed 49.6% this year. For 2008, silver had lost 24%.

The dollar, which has served as a safe-haven asset over the past year because of its low yield, fell earlier today. But then, it reversed its course. The dollar index, which measures the strength of dollar against a basket of other currencies, rose by 0.4%.

The Labor Department in US reported on Thursday, 17 September, 2009 that The number of people filing for state unemployment benefits for the first time fell 12,000 to a seasonally adjusted 545,000 last week, the lowest since mid-July, 2009. The number of people claiming benefits of any kind was 9.53 million, not seasonally adjusted.

The Commerce Department reported on Thursday, 17 September, 2009 that construction of new single-family homes and apartments accelerated in August to the strongest pace in nine months. Total housing starts rose 1.5% to a seasonally adjusted annual rate of 598,000, the highest figure since November 2008.

In 2008, gold prices ended higher by 5.5%. The dollar index had gained 12% that year.

At the MCX, gold prices for October delivery closed lower by Rs 56 (0.35%) at Rs 15,852 per 10 grams. Prices rose to a high of Rs 15,971 per 10 grams and fell to a low of Rs 15,820 per 10 grams during the day's trading.

At the MCX, silver prices for December delivery closed Rs 167 (0.6%) lower at Rs 27,455/Kg. Prices opened at Rs 27,645/kg and fell to a low of Rs 27,415/Kg during the day's trading.

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