Prices manage a steady end after Fed's statement
Bullion metal prices remained volatile for the entire day on Wednesday, 16 December, 2009 but ultimately ended higher. Prices fluctuated in tandem with the dollar which in turn reacted to Fed's comments at the end of its two day FOMC meeting.
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, gold for February delivery ended at $1,136.2 an ounce, higher by $13.6 (1.2%) an ounce on the New York Mercantile Exchange. It fell to a low of $1,130 earlier during the day. 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 28.7%.
On Wednesday, December Comex silver futures ended higher by 24.5 cents (1.4%) at $17.69 an ounce. Last week, silver ended lower by 7.6%.
In the currency market on Wednesday, the dollar fluctuated
quite a bit. It fell initially in the day but then gathered strength
following Fed's remarks which made sure not to extend its liquidity
assistance and emergency loan facilities any further than the dates
that were decided previously. It also said it is going to keep interest
rates near zero for quite some tome now. The dollar once again lost
some steam at the end.
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 higher by Rs 133 (0.78%) at Rs 17,174 per ten grams. Prices rose to a high of Rs 17,249 per 10 grams and fell to a low of Rs 17,028 per 10 grams during the day's trading.
At the MCX, silver prices for March delivery closed Rs 297 (1.08%) higher at Rs 27,615/Kg. Prices opened at Rs 27,297/kg and rose to a high of Rs 27,719/Kg during the day's trading.