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Wednesday, February 24, 2010

Bullion metals end lower


Prices drop in tandem with US stocks and crude price

Precious metal prices ended lower on Monday, 22 February 2010. Prices slipped in synchronization with US stocks and crude prices. A steady dollar also pressured bullion metal prices.

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 Monday, gold for April delivery ended at $1,113.1 an ounce, lower by $9 (0.8%) an ounce on the New York Mercantile Exchange. During intra day trading, it rose to a high of $1,131.5. Last week, gold gained 3.1%. For January 2010, gold lost 1.2%. Year to date, gold is higher by 1.7%.

On Monday, March Comex silver futures ended lower by 15 cents (1.2%) at $16.22 an ounce. Last week, silver ended higher by 4.1%. In January 2010, silver shed 3.9%.Year to date in FY 2010, silver has dropped by almost 1.9%.

US stocks traded in the red with mild losses for most part of the day on Monday mainly bogged down by the healthcare sector.

In the currency market on Monday, the dollar index, which weighs the strength of dollar against the basket of six other currencies erased earlier losses and rose marginally against the euro.

The World Gold Council reported last week that demand for gold climbed 2.6% in the fourth quarter from the prior three-month period. Gold consumption increased to 819.7 metric tons with prices averaging 15% more on a quarter-to-quarter basis. Conversely, demand for gold fell 24% in the fourth quarter from a year ago, and was down 11% in 2009 versus the year earlier.

Gold had ended FY 2009 higher by 24%. Silver futures had ended 2009 up 50%. The dollar index had lost 4.2% against its counterparts last year.

Last year, after hitting a low at $807.30 per ounce on 15 January 2009, gold futures rallied almost 51% to hit an all-time high at $1217.40 per ounce during early December of 2009 but fell from those levels at the end. Silver futures had hit a low at $10.42 on 15 January 2009 and hit a high at $19.30 per ounce on 2 December 2009. Like gold, silver also ended lower than its all time high level.

At the MCX, gold prices for April delivery closed lower by Rs 124 (0.73%) at Rs 16,692 per ten grams. Prices rose to a high of Rs 16,889 per 10 grams and fell to a low of Rs 16,652 per 10 grams during the day's trading.

At the MCX, silver prices for March delivery closed Rs 253 (0.99%) lower at Rs 25,260/Kg. Prices opened at Rs 25,586/kg and fell to a low of Rs 25,150/Kg during the day's trading.

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