Prices turn pale as dollar shoots to three month high
Bullion metal prices registered sharp fall on Thursday, 17
December, 2009. Prices fell drastically as the dollar shot up to three
month high levels as traders mulled over the fact that Fed will take
steps to boost the slipping dollar in current times.
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 February delivery ended at $1,107.4 an
ounce, lower by $28.8 (2.5%) an ounce on the New York Mercantile
Exchange. Last week, gold shed 4.2%.
Gold ended November, 2009 higher by 13%. Before that, for the
third quarter it ended higher by 8.7%. For the second quarter, gold
ended higher by 0.5%. The metal had gained 4.3% in the first quarter of
this year. On a year to date basis, gold price is higher by 26.2%.
On Thursday, December Comex silver futures ended lower by 50
cents (2.9%) at $17.195 an ounce. Last week, silver ended lower by
7.6%.
In the currency market on Thursday, the U.S. dollar rallied
to its highest level in more than three months, supported by a rush to
safety spurred by concerns about Greece's debt payments and a
reassessment of when the Federal Reserve could begin to tighten U.S.
monetary policy. The dollar index, which weighs the strength of dollar
against the basket of six other currencies rose by almost 1%.
In 2008, gold prices ended higher by 5.5%. The dollar index had gained 12% that year.
At the MCX, gold prices for February delivery closed lower by
Rs 235 (1.4%) at Rs 16,939 per ten grams. Prices rose to a high of Rs
17,217 per 10 grams and fell to a low of Rs 16,885 per 10 grams during
the day's trading.
At the MCX, silver prices for March delivery closed Rs 352
(1.3%) lower at Rs 27,263/Kg.
Prices opened at Rs 27,537/kg and fell to
a low of Rs 27,154/Kg during the day's trading.