Friday, February 19, 2010

Precious metals register marginal drop

Prices recover from intra day lows as dollar remains steady

Yellow metal prices ended little lower on Thursday, 18 February 2010. Gold pared some of its earlier losses and ended little lower for the day as the dollar remained steady. Silver prices also fell.

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 April delivery ended at $1,118.7 an ounce, lower by $1.4 (0.3%) an ounce on the New York Mercantile Exchange. During intra day trading, it rose to a high of $1,124.6 and fell to a low of $ 1,098.1. Last week, gold gained 4%. For January 2010, gold lost 1.2%. Year to date, gold is higher by 2.2%.

On Thursday, March Comex silver futures ended lower by 2 cents (0.1%) at $16.078 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 0.9%.

In the currency market on Thursday, the dollar index, which weighs the strength of dollar against the basket of six other currencies rose by almost 0.2%.

Among economic report scheduled for the day, The Labor Department in US reported Thursday, 18 February 2010 that the number of people filing initial claims for state unemployment benefits rose by 31,000 to a seasonally adjusted 473,000 last week. Market was expecting initial claims to rise to about 447,000. The four-week average of initial claims fell by 1,500 to 467,500, about 20,000 more than expected. State jobless claims have risen in five of the seven weeks so far in 2010.

Separately, the Labor Department in US also reported on Thursday, 18 February 2010 that U.S. wholesale prices rose a seasonally adjusted 1.4% in January on double-digit increases in gasoline and home heating oil.

The World Gold Council reported yesterday 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 higher by Rs 19 (0.11%) at Rs 16,775 per ten grams. Prices rose to a high of Rs 16,845 per 10 grams and fell to a low of Rs 16,527 per 10 grams during the day's trading.

At the MCX, silver prices for March delivery closed Rs 65 (0.26%) higher at Rs 25,112/Kg. Prices opened at Rs 25,026/kg and rose to a high of Rs 25,340/Kg during the day's trading.