Prices drop again as dollar firms up after housing data
Bullion metal prices turned paler on Tuesday, 22 December 2009.
Prices fell as the dollar firmed up following a batch of better than
expected economic data, mainly in the housing 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, gold for February delivery ended at $1,086.7 an
ounce, lower by $8.7 (0.8%) an ounce on the New York Mercantile
Exchange. Yesterday, gold fell below the $1,100 level for first time in
more than one and half months. Last week, gold shed 1.1%. The metal
fell for three straight weeks.
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 24.4%.
On Tuesday, December Comex silver futures ended almost
unchanged (marginally lower) at $17.03 an ounce. Last week, silver
registered marginal fall. The metal has gained 51.3% this year until
date.
In the currency market on Monday, the greenback started the
day in the mixed mode. Then, the dollar's move caused a pullback in
commodity prices. The dollar index, which weighs the strength of dollar
against the basket of six other currencies rose by almost 0.2%.
The National Association of Realtors in US reported on
Tuesday, 22 December 2009 that resale of U.S. homes increased by 7.4%
to 6.54 million in November, 2009.
The sales pace was the highest since February 2007 and was
the third-straight large increase in existing home sales. Sales are up
28% since August. The report also stated that sales are up a record
44.1% in the past year, reflecting a recovery in the housing market
after the sharpest downturn in decades.
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 264 (1.55%) at Rs 16,705 per ten grams. Prices rose to a high of Rs
17,024 per 10 grams and fell to a low of Rs 16,672 per 10 grams during
the day's trading.
At the MCX, silver prices for March delivery closed Rs 338
(1.23%) lower at Rs 26,977/Kg. Prices opened at Rs 27,405/kg and fell
to a low of Rs 26,921/Kg during the day's trading.